Over a two-week period in 2012, small business owners took to Twitter with the hashtag #GetPaidNotPlayed. The result was the world's longest invoice, made up of tweets totaling over $15 million in unpaid revenue, according to Forbes. Although this figure represents a mere fraction of all of the country's unpaid invoices, it paints a picture of how unpaid invoices can quickly add up, causing a business to delay paying their own bills, sometimes including payroll, and ultimately shut off the lights.

To reclaim unpaid invoices, small business owners can head to small claims court, hire a bill collector or sell the debt to a lawyer. Once those fees are paid, however, it hardly seems worth the effort. Work toward bringing in fewer unpaid invoices instead. If you want to face fewer unpaid invoices, work on streamlining the invoicing process.

Due Diligence

Before providing anyone with your products or services, do your due diligence and weigh whether or not they are worth the financial risk. Discovering which companies are likely to pay late or not at all can be invaluable for a small business owner, who counts on their working capital to be there.

If possible, use a monitoring program like the one offered from Cortera to keep tabs on your clients and help you weigh their merits. If the monitoring program notices any significant changes to the companies with whom you are working, it notifies you immediately. Then, you can make an informed decision about your current arrangement.

This type of information is critical even if you are working with industry-known names. Unfortunately, even big companies can be prone to ignoring invoices from their small business contractors and suppliers. For example, a New York Times article reports that Cisco systems once instigated a policy of waiting 60 days to pay their invoices. For a cash-strapped business, this kind of delay can be disastrous.

Perfect Paperwork

Make sure you make the invoice visible—send a digital copy instead of a paper copy or better yet, send both. Before sending anything, ensure that everything is filled out correctly. Some of your clients will look for almost any excuse to delay paying your invoice, so make sure the paperwork is flawless and has the right purchase order numbers and is formatted to the client's specs. If this is a new relationship, see if your client requires a new vendor form.

Small business invoice software can help you streamline and perfect the invoicing process. Create and track invoices in one place, from any device.

Don't Be Afraid to Say Goodbye

Sometimes, you simply have to cut your losses and walk away from a client. Be sure to keep clear tabs on who is late when. Be willing to cut the riskiest clients loose or turn them into cash-only clients if needed.

Worst Case Scenario

If you do get stuck with an unpaid invoice, you may be able to write off the loss at the end of the year, according to the Small Business Administration. According to McKenzie, a small business accountant, businesses who file on a cash basis cannot write off unpaid invoices, but businesses who work on an accrual basis can. If the invoices are considered income, you can write off the unpaid ones as a debt expense. However, if you streamline the process first, you can hopefully avoid this step.

Author Bio
Murray Lunn is a freelance writer specializing in content marketing for online businesses; his work includes business blogging, product development, and brand development.