How to Collect Debt From a Friend Without Damaging Your Relationship

One of the most common issues we encounter at FJCM is when a debt is owed to a business by a friend or acquaintance who has used their services. It can be a tricky situation: you want to maintain the relationship, but you also need to get paid.

In this guide, we outline the most frequent scenarios where debts arise between friends and how to collect a debt from a friend without the awkwardness or fallout.

When Business and Friendship Collide

Let’s say your friend purchases a product or service from your business. You agree on a fee, you deliver the service, but because it’s your friend, you skip your usual customer onboarding process.

Maybe you didn’t:

• Confirm payment terms in writing.
• Send a formal invoice.
• Issue your terms of business or a contract.

Your friend may have a good payment history and a solid reputation, so you assumed there wouldn’t be a problem.

But what happens when:

• They experience cash flow issues and prioritise other suppliers?
• They cancel your service and assume the don’t need to pay citing the friendship?

Why Formal Procedures Still Matter, Even with Friends

Many small business owners and freelancers make the mistake of relaxing their usual procedures when dealing with friends or acquaintances. This can lead to disputes, delays, or unpaid invoices.

Here are common oversights:

• Failing to get a business or invoice address.
• Not performing any credit checks.
• Avoiding written agreements because it feels “untrusting”.
• Assuming verbal agreements are sufficient.

Pro-tip: Always treat business with friends like any other professional transaction, clear documentation protects both parties.

What to Do When Your Friend Owes You Money

1. Start with a clear, polite communication – Don’t be afraid to ask for payment. A professional approach shows that you’re running a legitimate business.
2. Remove emotion from the conversation – Stick to the facts: a product or service was delivered, and payment is overdue.
3. Use your existing contact methods – If all you have is an email or phone number, start there. Keep the message simple and direct.
4. Follow up in writing – Any verbal discussions should be summarised in an email or letter for clarity.

When to Begin a Formal Debt Recovery Process

If communication breaks down (no responses to emails or calls), don’t wait too long.

Let them know, politely but firmly, that non-payment will lead to the involvement of a professional debt recovery service. For example:

“Although this is not something I wish to do, it is with regret that I will be passing the debt over to our debt collection partners if payment is not received by [date]”

This statement sets a clear deadline and introduces consequences without being aggressive.

Payment Plans or Reduced Settlements

If your friend genuinely can’t pay the full amount due to financial hardship, consider offering:

• A Formal Payment Plan – For example: “You agree to pay £100 starting [date], then £100 weekly until the balance is cleared”.
• A Temporary Reduced Settlement Offer – Be clear about the deadline: “This offer is valid until [date], after which the full balance will become due again”.

Put all agreements in writing and ensure both parties agree to the terms.

Setting Boundaries Builds Respect

Doing business with friends doesn’t have to end badly, but you must stay professional. In 2025, with more businesses operating remotely and more services offered online, clear communication and proper documentation are more important than ever.

Always:

• Send invoices and contracts, even to friends.
• Outline your payment terms upfront.
• Treat every transaction as a business deal.

Being transparent and consistent not only helps you get paid, it shows you’re a professional worth doing business with.

Updated: 4th August 2025