Collect Debt from a friend without the awkwardness!

One of the most common issues we come across is with debt that has occurred through trust or friendship.

Let’s say your friend or business acquaintance decides to purchase one of your services or products. You agree a fee and you provide your service or product. However, you didn’t follow your usual procedure in the same way you usually do when you obtain a new customer. You didn’t get their full details and you didn’t inform them when their payment would be required by.

Your friend:

  • Delayed on making payment because he knows you and you didn’t inform him of your payment terms.
  • Runs into cash flow problems and thinks that you can wait for your money.
  • Cancelled your service and expected not to have to pay you (because he is your friend).

You Didn’t:

  • Obtain your friends business address, invoice address or any of the correct channels of communication.
  • Issue a contract or a “terms of business.”
  • credit check your friend or their business because you trusted it would be alright, “they will pay” you say!
  • Send your official terms of payment because it felt awkward. You didn’t want them to think that you “don’t trust them!”

What happens:

  • Your friend now owes you money.
  • Now you feel awkward asking for your payment because you don’t want to ruin your relationship with them.
  • You now have to collect debt from a friend!

You ask for the money:

  • They either apologise and make the payment (hopefully)
  • They don’t answer, they delay and the debt runs on…..

If you had gone through the same process that you usually do with new customers, you might not be in this position now.

If only you had their full address and company details. If only you had the correct channels to chase the payment effectively.

The moral of the story…. Even if you have provided a service or product to your friend, you must always obtain their full company details.

You must always issue them with the official terms of your service or product.

Even if they are a close acquaintance, you will always gain more respect by taking them through the correct processes of your business. They will tell their friends you are professional and be more likely to recommend you.

You don’t have to feel awkward about asking for all of their details and telling them what your company payment policies are. Blame “company rules” if you have to.

Doing the above basics, may save your friendship in the long term.

Download our free “new customer template form” below. Edit the template to suit your company. Then send it to your customers (all of your customers) as part of your procedure every single time.

Using a new customer account form for all of your customers, will improve any customer related issues that may arise and will let your customers know that you are always professional when it comes to business, even when you are “friends.”