5 Things to Consider Before Lending Money to A Co-Worker
“My colleague wants me to lend him a huge sum of money to sort out pressing issues. I have the money and would like to help out. I don’t know how to go about this, I mean, it is a lot of money. How do I make sure I get my money back?” Asks Brad Jonson (Not real name)
Sometimes we find ourselves in a tight spot and need a bailout from a second party. It is nothing new. However, when it comes to lending to co-workers, pause and consider all the options to avoid ruining work relationships. Money is usually a common cause of conflict. You wouldn’t want money to be a bone of contention or come between you and your colleague in the office. Or would you? Many people like Brad would like to help colleagues in need but afraid to because they are avoiding issues associated with lending.
Lending is a 50/50 chance, there will always be risks. That’s why if you must give out a loan especially to a colleague, do this:
Do you have money to spare?
Firstly, before you go ahead to lend, dig deep into your pocket, ask yourself if you really have enough to spare or you just want to help because he/she needs help. Don’t make money decisions with emotions to avoid regrets and damaged relationships in the future.
What is your relationship with the person?
What is the nature of your relationship with this person? Can you trust him/her to pay back the loan when due? Do you know them well enough to stake your money? Be sure you are comfortable with lending to that person, otherwise, apologize politely that you can’t help.
Have a rule/limit
For what it is worth, always set a limit to the amount you can lend out to anyone if you must. This makes it easy to decide when need be, if you have the money to loan out or not and how much you are willing to loan.
Have an agreement
No matter how cool you may be with a co-worker when money is involved, it is wise to have a paper agreement signed, setting the terms of the loan and when a refund is due. Have both parties sign the agreement.
Have an alternative payback plan
There will always be a possibility of default. Therefore, you two should agree on another payment option in the event the person cannot pay back the cash on the agreed timeline. This could be in the form of services or material gifts.
What if he/she refuses to pay back after all?
If the due date comes and goes without any word from your co-worker, do not feel guilty about approaching them. Give a gentle reminder to him/her that you are expecting a payback then follow up.
Lastly, if you are not cool or comfortable with the idea of lending money to a co-worker, it is okay to say NO before it is too late. Rather you can offer alternative solutions to him/her.