How To Handle Friends Who Owe You Money
Few things in business are more awkward than having a friend as a debtor who's not paying. The obvious dilemma is which to put first... your business or your friendship?
Few things in business are more awkward than having a friend as a debtor who's not paying. The obvious dilemma is which to put first... your business or your friendship?
Now while you might feel stuck between a rock and a hard place the truth is the greatest threat to your friendship is actually turning a blind eye to the debt. Imagine the impact on your friendship if that un-recovered account in some way contributed to your business hitting the wall.
Hence, by not repaying their debt your friend is the one whos setting both your business and as well as your relationship up to fail.
All of which may leave you thinking you're damned if you do and you're damned if you don't. Thankfully there is a way to protect your business and preserve your relationship.
So if you find yourself in this position, the first thing you must do is either in writing or in person speak your truth. Simply say something along the lines of...
"I value our friendship and would do nothing to jeopardize it. However, now that my business is going through a tight spot not asking you to repay the money you owe me puts both our friendship and my business at risk. And because the last thing I'd want to happen is for us to fall out over money I'd be most grateful if you could settle your account by the end of this week."
Now as this is a statement of fact so long as you relay it calmly and respectfully no true friend would resent you for making this request.
Having now asked for your money back, one of four things will happen.
The first and best possible outcome is that they settle their outstanding debt with you. In this scenario you know that a. your friendship is worth something and b. that your business is OK.
The second possible scenario is that your friend confesses that they're so strapped for cash that they don't have the means to settle their debt. And while it's natural to feel for them the harsh reality is that they're the one whos putting themselves before your friendship.
The third possible scenario is where your so called friend either tries to pull a guilt trip or instead blows a fuse. In either case they flat out refuse to pay. Now while this may come as a shock they have in fact done you a huge favor. They've made it perfectly clear that the only reason they pretend to be your friend is to exploit your good nature. So at least you now know where you stand.
And the final possible outcome is that they promise to pay you by a certain date and then fail to honor their word. This particular outcome should ring clear and loud alarm bells that not only is your friendship baseless, but your so called friend is also in deep financial strife.
If you find yourself in any of the final three scenarios you need to acknowledge that you're dealing with a serious debt risk that you can't recover on your own. The only hope you have of recovering this money is to refer the debt to a debt collection agency.
Having accepted the fact that you need outside help all that remains for you to decide is whether or not you want to minimize damage to your friendship.
Should you want to show your friend some compassion you should definitely seek out a collection agency that provides "Velvet Glove" debt recovery. In essence "Velvet Glove" recovery is a respectful yet assertive approach to recover money in 30 days or less without penalizing you or your friend with collection agency commissions. Using this approach, if they value your friendship they'll pay up and your friendship wont be irrevocably damaged.
If on the other hand they've told you where to go (i.e. either of the last two scenarios above) OR they don't pay within the "Velvet Glove" phase then you must adopt a no-holds-barred approach to recover your money immediately. Dont be fooled... under these circumstances they've declared your friendship over and they really don't care if you and your business falls over. With this in mind you have no choice other than go for the jugular using what's known as an "Iron Fist" approach.
Now this may all sound harsh but at the end of the day you've done nothing wrong by asking for your money back. After all, it's rightfully yours. No true friend would ask you to put your business as well as your friendship at risk over money.
Few things in business are more awkward than having a friend as a debtor who's not paying. The obvious dilemma is which to put first... your business or your friendship?
Now while you might feel stuck between a rock and a hard place the truth is the greatest threat to your friendship is actually turning a blind eye to the debt. Imagine the impact on your friendship if that un-recovered account in some way contributed to your business hitting the wall.
Hence, by not repaying their debt your friend is the one whos setting both your business and as well as your relationship up to fail.
All of which may leave you thinking you're damned if you do and you're damned if you don't. Thankfully there is a way to protect your business and preserve your relationship.
So if you find yourself in this position, the first thing you must do is either in writing or in person speak your truth. Simply say something along the lines of...
"I value our friendship and would do nothing to jeopardize it. However, now that my business is going through a tight spot not asking you to repay the money you owe me puts both our friendship and my business at risk. And because the last thing I'd want to happen is for us to fall out over money I'd be most grateful if you could settle your account by the end of this week."
Now as this is a statement of fact so long as you relay it calmly and respectfully no true friend would resent you for making this request.
Having now asked for your money back, one of four things will happen.
The first and best possible outcome is that they settle their outstanding debt with you. In this scenario you know that a. your friendship is worth something and b. that your business is OK.
The second possible scenario is that your friend confesses that they're so strapped for cash that they don't have the means to settle their debt. And while it's natural to feel for them the harsh reality is that they're the one whos putting themselves before your friendship.
The third possible scenario is where your so called friend either tries to pull a guilt trip or instead blows a fuse. In either case they flat out refuse to pay. Now while this may come as a shock they have in fact done you a huge favor. They've made it perfectly clear that the only reason they pretend to be your friend is to exploit your good nature. So at least you now know where you stand.
And the final possible outcome is that they promise to pay you by a certain date and then fail to honor their word. This particular outcome should ring clear and loud alarm bells that not only is your friendship baseless, but your so called friend is also in deep financial strife.
If you find yourself in any of the final three scenarios you need to acknowledge that you're dealing with a serious debt risk that you can't recover on your own. The only hope you have of recovering this money is to refer the debt to a debt collection agency.
Having accepted the fact that you need outside help all that remains for you to decide is whether or not you want to minimize damage to your friendship.
Should you want to show your friend some compassion you should definitely seek out a collection agency that provides "Velvet Glove" debt recovery. In essence "Velvet Glove" recovery is a respectful yet assertive approach to recover money in 30 days or less without penalizing you or your friend with collection agency commissions. Using this approach, if they value your friendship they'll pay up and your friendship wont be irrevocably damaged.
If on the other hand they've told you where to go (i.e. either of the last two scenarios above) OR they don't pay within the "Velvet Glove" phase then you must adopt a no-holds-barred approach to recover your money immediately. Dont be fooled... under these circumstances they've declared your friendship over and they really don't care if you and your business falls over. With this in mind you have no choice other than go for the jugular using what's known as an "Iron Fist" approach.
Now this may all sound harsh but at the end of the day you've done nothing wrong by asking for your money back. After all, it's rightfully yours. No true friend would ask you to put your business as well as your friendship at risk over money.
Author:
To help you recover unpaid debts from friends who won't pay The Debt Doctor's debt collection blog reveals where to find debt collection agencies that provide "Velvet Glove" and "Iron Fist" debt recovery.
