I consider myself a kind and understanding person.
When it’s possible for me to help in a situation, I tend to go out of my way (sometimes to a fault).
But here are some interesting lessons that I have learned recently when the helping goes too far and business and friendship get muddied together.
Context
My company was running adverting campaigns for a brand (leaving this vague to keep identities private)
I considered the owners of the company to be friends (we have been through some business trenches together in the past)
ROI was high and the relationship was very strong
They came on some financial difficulty
I let the invoicing run past due (for months) on the promise of payment
I eventually suspended work and maintained ownership of the completed work
They started working with another agency (75 days later)
Now they refuse to pay for outstanding invoices
So I am left in a difficult situation. I know they have the money to pay but are now saying that they were not happy with the work (despite my long email history of them thanking me for the quality of the work).
The funny thing is that I knew letting the invoices run late was a bad idea. It has burned me in the past. Yet, my instinct to be helpful and accommodating got the better of my judgment.
My decision to suspend the campaign seemed to be their biggest point of contention. The idea of holding back "their assets" started the downhill path of conversation. Yet, when faced with the option to pay or lose access, very minimal payments were offered to keep the account balanced.
The result is $38k in lost money and 2 people who I previously enjoyed knowing who I now do not want to speak with.
Over the years I have dealt with different versions of unpaid invoices. Here are the most significant changes I have made to minimize risks and problems (especially if you are a softie business owner like me).
1 - Automate the billing wherever possible. If you have retainer-based clients, try to set up automatic credit card debits each month so that invoices are paid on schedule.
2 - Get someone else to manage the accounts receivable conversations. My ops person used to do this for me and it created some separation between me and the money. This can help if you are the face of the brand (85% of agency owners are the face of the company according to my recent survey results).
3 - Simplify the written contracts and make the financial and termination sections in bold font. The simplification makes the document feel more real and practical to people. **I am NOT a lawyer so don’t take this as advice, k thanks.
4 - Don’t mix social interactions with business. If you are hanging out with a friend that you are also doing work for you should avoid having important business conversations during chill time. Create separate meetings that have defined goals (preferably one topic per meeting).
5 - Remove the emotion. This is very hard for me but it’s critical. Your business is a machine that requires certain things to operate, including income. If the machine does not get what it needs, it breaks. Your love and compassion for people cannot factor into decisions about the essential elements of your company.
I have sent this person to collections. The process is very simple and the collection agency takes a percentage of the funds recovered so there is no risk. I had a perception that collections were only available to larger corporations but it’s much more accessible than I thought.
Hope this story sparks some inspiration to better protect yourself and separate business from pleasure where needed. I heard from 5 people on my Instagram story alone that they have experienced a similar situation to this in the past.
Mike
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