I took the following from this help article about paying for AdWords
How it works
With this setting, you make a payment to your AdWords account before your ads run. Then, as your ads run, your advertising costs are deducted from the payment you've made. We can notify you by email (if you asked us to) when your account balance starts getting low, and you can make another payment whenever you'd like.
You'll need to remember to top it up, it won't automatically take it. Thats why it's called manual billing, not automatic ;-)