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Abu Dhabi, UAEThursday 18 October 2018

Digitise your IOUs to make lending a pleasure not a pain

Whether it's a group event or a friend is simply borrowing money, online applications can help track who owes you 

Web-based apps can help you keep a record of who owes you what. Getty Images
Web-based apps can help you keep a record of who owes you what. Getty Images

‘VIT (Very Important Thing): pay mum 100 dirham’ read the note in red marker on the whiteboard in the kitchen. My son is acknowledging his debt and keeping a tab of what he owes. I’d paid Dh99 for an online purchase for him and he could not find his wallet.

He’s more on the ball than friends of mine who don’t pay their way. It makes it expensive going for things like group gifts and ticketed events.

The problem is, how do you go about collecting money while maintaining friendships? One consideration is not to make it personal – but it is.

If your friends are going to ignore you, remove the element of personal fallout - get online tech to do the dirty work – it will save fretting, chasing and getting worked up. This is where online apps come into their own.

They are transparent, have no emotional bias or primed responses. Some even send out payment reminders and let you make, or accept, payments online. Best of all, many are free. You just need to set up an account to use them.

Here are a few to consider:

• Splitwise (free)

Shares out bills and IOUs and keeps a running total owed to each person, as well as the bits that make it up – ie who owes what. It also comes with a ‘fairness calculator’ - and sends out payment reminders.

• Pay it square (not free)

This allows you to take credit card payments. The card transaction fee is 2.75 per cent of the total, and many would consider this worth the no/low hassle factor for many. Think events page meets IOU spreadsheet. If you are organising a big get together for example, you can see who’s coming, and whether they’ve paid their share. Payments can be collected online – with offline payments tracked too. The app sends out notification emails to those who need reminding. It works for small businesses, and it can work for you.

• Buxfer (monthly fee)

In addition to keeping on top of your finances, this app has an IOU option that keeps track of any money you lend or borrow. As well as the monthly fee, there is a cost incurred for receiving money.

• IOU (Basic option is free. ‘Pro’, which allows full access to options, is $29.99 a year)

Of course, there has to be one with this name too. Its tagline is: Think how much you can save by remembering all the small debts.

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It’s one thing to remember, another to collect, which is still a pain, no matter how seamless the app makes it out to be. Wouldn’t it be great not to have to do any of it at all?

Let’s take a step back and deal with the issue of lending friends and family money. Some have no intention of paying you back – app or no app – or they convert it to a gift, forget it ever happened, or similar stories that leave you short. As I write, I am hoping I am not an offender ... it wouldn’t be intentional if I am – but that’s part of the point, that some of us genuinely forget.

It’s a delicate issue isn’t it? And so, my note to myself is this: bring back a kitty – a physical hat or money-bag – where we put in the cost of things before it’s needed plus 10 per cent. That way you can spend it, have fun, and if there’s anything left over, divide it amongst the participants.

This assumes everyone is fine splitting cost equally; there are those who go through every line of a bill and will only pay for what they have consumed – if this is you or a friend of yours, you’ll find the kitty approach won’t work.

Assuming you’ve fine-tuned your kitty rules of engagement, mine would be simple: pay money up front by a certain deadline, after which tickets will be bought accordingly. It only takes someone missing out once for them to change their behaviour and pay on time.

There’s another advantage to this approach too: it means no one is taking on the risk of bad debt. This is one key failing with online apps: how do you enforce payment and protect yourself and other paid-up consumers? Going the legal route to recover whatever the spend was is not an option for small amounts, and ruins friendships.

A night out will cost a fraction of, say a loan to a friend to pay the cost of repairing a car. You could, in theory, be left paying either, or both bills, if you’re tapped for the money.

This, essentially peer to peer lend, is not protected.

The bottom line is don’t lend to others what you cannot afford to lose. I would also add: don’t lend to friends you don’t want to lose.

And don’t be that person who doesn’t pay what they owe. Even if your friend can afford it, it is irritating at best.

My son told me he is ‘very specific’ and wants the Dh1 change due. He’d put Dh100 on the board because he knows he has a Dh100 note. I take this to mean he won’t be one of life’s future financial irritants. Now where is that wallet of his...

Nima Abu Wardeh is a broadcast journalist, columnist and blogger. Share her journey on finding-nima.com