If you've ever had difficulty collecting on an invoice, you are in good company. Accounts receivable is the top cash-flow concern of small businesses, as well it should be. The folks at Fundbox estimate the total amount in unpaid invoices across all U.S. small businesses is approximately $825 billion. This comes to an average of $84,000 in unpaid invoices per small business. That may not be you, but any amount owed is too much.

In my experience, entrepreneurs who deliver a service are especially vulnerable because there are so many variables in how and what service-based businesses deliver. However, you can take precautions to avoid, or at least minimize the chances of being burned by a client. 

Remain calm and don't take it personally.

Entrepreneurs often question, not only the value of their work but their personal value when a client shows signs of skipping out on a bill. Separate feelings from facts. 

Begin by not jumping to conclusions and don't panic at the first signs of trouble. They may have just forgotten, or it could be a temporary cash-flow issue. In the end, if you do have to fight for monies owed, it likely has nothing to do with you or your services. I find that people who skip out on a bill are usually struggling financially and/or emotionally themselves. This doesn't make it better for you, but if you take it personally the weight of this issue will perpetuate the problem down the road. 

Put everything in writing.

Upon reaching an agreement, send the client the details of your billing procedures, guarantees, and any other points they should know about your service. This avoids surprises and confusion on both ends. 

Be very clear about deliverables.

From the very beginning, you must be clear about the scope of the project and specifics of your service. If you are delivering in phases break out each phase in writing.

Follow up after each phone call with a bullet-pointed list that outlines what you have agreed upon, including deadlines and any information owed to you by the client.

Take a down payment that covers labor costs.  

You should never put yourself in a situation where you are paying contractors or employees out-of-pocket. The down payment on your services should cover these expenses, as well as the cost of goods. Your work needs to be covered, as well. Calculate these costs up front and get the money before you begin the work.

Have an electronic billing process in place and issue invoices (and reminders) on time. 

While in most states you do need permission to run a credit card, having payment information on file is not a bad idea. Make sure you store the information safely and in accordance with data security laws. This is best done by using a third-party service, like QuickBooks. 

Be diligent about sending invoices at each phase of your project; most systems will allow you to set up automatic invoicing.  If you are a coach or a consultant who does not work on a project basis, bill ahead of time for your services. 

Have a written process that details how you collect on past-due invoices. 

Keep a checklist on the things you will do once an invoice falls into the past due stage. Also, create prewritten correspondence so you don't have to face the uncomfortable task of writing reminders and warning letters over and over again. Send a friendly reminder immediately if someone misses the due date. Sometimes, this is all that's needed. Beyond that, you may want to consult with your accountant or small-business attorney to get your correspondence in place. 

Stay on top of receivables from the very beginning. 

According to a 2017 Dunn & Bradstreet report, invoices over 12-months have a 90 percent chance of default. Twenty-six percent of invoices in your 90-day category may be uncollectable, and 70 percent of invoices six months old are unlikely to get paid. Call on them. You are not a nag, you simply want and deserve to be paid. 

Be clear about extensions and/or payment plans, should you allow them.

Every now and again you may find it necessary to allow payment plans, even though this was not in the original agreement. Charge a small fee for this concession. Again, put everything in writing.

Let a professional handle it.

You're an entrepreneur, not a debt collector. Talk to your accountant and small-business attorney if you are unsuccessful in collecting a debt. Your attorney (or a debt collector if he or she advises) will first send a letter demanding payment. There is also business mediation or small-claims court and, if the debt exceeds the amount allowable in small claims, you may file a lawsuit. 

Know when to let go.

No one likes to get burned, and the odds of it will reduce if you are diligent in your processes. But there are times when the writing is on the wall. If you carry anger or engage in self-recrimination, you'll face a tough road ahead. Review what went wrong and what you could have done differently, if anything. Learn from it and move on to healthier clients.