It's nice to be friends with customers. From a marketing perspective I encourage you to have as strong a relationship as you can but when attention turns to debt collection, it is a different matter.
Some small businesses shy away from using formal debt collection procedures with friends and are even reluctant to ask to be paid.
It's as if asking for the money you are owed will damage your friendship.
"They'd pay you if they had the cash wouldn't they?"
Well perhaps not.
Giving anyone credit and time to pay after receiving goods and services is a friendly act.
Not paying you when the money is due is not.
Friends go out of the way for each other and don't expect one to give while the other takes.
So if friends owe you money, stick to your normal debt collection procedures:
- Check that they are good for the money. If the credit report comes back poor, at least you are in a position of knowledge and can decide whether you want to give credit but make it clear that you are doing so because of the trusting relationship.
- Stick to normal credit terms. It's better to discount your price than extend your terms.
- Send your invoices out as soon as your goods or services are supplied.
- Follow up on any very large invoices to make sure they are passed for payment and give a reminder of the due date.
- If the money doesn't come in, chase up. Be sympathetic by all means but be firm. You want payment.
- If you are promised the cheque is in the post but it never comes, if your friend becomes evasive and doesn't return your calls, you have to ask yourself what your friendship is worth.
Friendship cuts both ways.
You provide a great product or service at a fair price and your friend pays you promptly and tells other people about your great business.
If you worry that you can't be friends if you ask for payment, your friend should be concerned that they will damage the friendship by breaking promises and taking advantage of your good nature.
Got the message?