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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?
However, the greatest threat to your friendship is actually not recovering your money. After all the life blood of your business is cash-flow and starved of cash everything you work so hard to build could come crashing down around your ears.
So while it's easy to feel guilty asking a friend for money in actual fact it's your friend who's backed you and your friendship in to a corner.
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 stated your truth, one of four things will happen.
Naturally, the ideal outcome would be for your friend to settle their debt. By doing so they clearly demonstrate the value they place on your friendship.
The second possible outcome is that they confide in you that they too are in a financial tight spot and they can't afford to pay you right now. In this instance while it's fine to feel sympathetic the harsh reality is they're putting themselves before your friendship.
The third possible outcome is that they tell you where to get off and refuse to pay. In so doing they've clearly enunciated "Our friendship doesn't mean that much to me. In fact I'm only pretending to be your friend so that I can take advantage of your good nature." And that's OK. Because at least you now know where you truly 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.
In each of these last three outcomes it's clear that you're not going to get your money back on your own. To recover your money and protect your business you need to refer your debt to an external debt collection agency.
Having accepted the fact that you need outside help all that remains for you to decide is how you want to handle your relationship.
If you do want to try and preserve your friendship then you should seek out a debt collection agency that has what is known as a "Velvet Glove" phase of recovery. Such an approach opens a window of opportunity whereby the collection agency works along side your debtor in a respectful, assertive yet inoffensive manner. In this 30 day window neither you nor your friend will be penalised with collection agency commissions. Using this approach, if they are a true friend they'll pay up and everyone will be happy.
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.
While this may appear harsh the fact of the matter is if they were a true friend they wouldn't ask you to risk both your business and your friendship over money. Bottom line: they've put you in this situation and given you no other reasonable choice.
However, the greatest threat to your friendship is actually not recovering your money. After all the life blood of your business is cash-flow and starved of cash everything you work so hard to build could come crashing down around your ears.
So while it's easy to feel guilty asking a friend for money in actual fact it's your friend who's backed you and your friendship in to a corner.
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 stated your truth, one of four things will happen.
Naturally, the ideal outcome would be for your friend to settle their debt. By doing so they clearly demonstrate the value they place on your friendship.
The second possible outcome is that they confide in you that they too are in a financial tight spot and they can't afford to pay you right now. In this instance while it's fine to feel sympathetic the harsh reality is they're putting themselves before your friendship.
The third possible outcome is that they tell you where to get off and refuse to pay. In so doing they've clearly enunciated "Our friendship doesn't mean that much to me. In fact I'm only pretending to be your friend so that I can take advantage of your good nature." And that's OK. Because at least you now know where you truly 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.
In each of these last three outcomes it's clear that you're not going to get your money back on your own. To recover your money and protect your business you need to refer your debt to an external debt collection agency.
Having accepted the fact that you need outside help all that remains for you to decide is how you want to handle your relationship.
If you do want to try and preserve your friendship then you should seek out a debt collection agency that has what is known as a "Velvet Glove" phase of recovery. Such an approach opens a window of opportunity whereby the collection agency works along side your debtor in a respectful, assertive yet inoffensive manner. In this 30 day window neither you nor your friend will be penalised with collection agency commissions. Using this approach, if they are a true friend they'll pay up and everyone will be happy.
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.
While this may appear harsh the fact of the matter is if they were a true friend they wouldn't ask you to risk both your business and your friendship over money. Bottom line: they've put you in this situation and given you no other reasonable choice.
About the Author:
To help you recover bad debts from friends who won't pay The Debt Doctor's debt recovery blog reveals where to find debt collection agencies that provide "Velvet Glove" and "Iron Fist" debt recovery.
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