Late Fees

Rentec Direct property management software provides automated processes to help keep your accounting records current and save you time. One of the automated processes is the application of late fees. By establishing a due date and grace period, late fees will automatically populate based on your custom preferences. 

Late fees are most commonly set up in accounting defaults, but can be configured individually per tenant. 

Default Late Fee Settings

Default late fee settings tell the system when to post late fees, how the fee is to be calculated, as well as the maximum amount to apply as indicated in your lease or rental agreement. These settings will automatically apply to new tenants as they are placed in properties. Setting up your default late fees is quick and easy. 

In your Rentec Direct account:

1. Click Settings
2. Under Financial, select Accounting Defaults
3. Customize your settings:
   1. Default grace period: The grace period is the time between when the invoice is due and when a late fee is charged. For instance, if rent is due on the 1st and a grace period of 4 days is selected, the late fee will populate on the 5th if no payment has been made to bring the account current. 
   2. Default principle late fee: If a tenant's balance is negative after the grace period, the principle late fee will be charged to the tenant. You may specify a flat amount like $25.00 or a percentage like 5% (of the Total amount due). 
   3. Default daily late fee: If a tenant's balance is negative after a grace period and/or the principle late fee has applied, the daily late fee will be charged to the tenant. Daily late fees may be specified as a flat dollar amount. (If the balance is only a current late fee, the daily late fee will not populate)
   4. Maximum total monthly late fee: This field allows you to specify the total late fee charges a tenant will receive in a month. For instance, if you set the principle late fee at $30, daily at $10, and maximum at $50 the tenant will receive one principle and two daily late fees to total that $50.00 maximum. The system will not post additional late fees that month. 
   5. Default Late Fee Product Category: The system defaults to a 130 Late Fee category 

Customize Tenant Exceptions - Making changes to individual Tenants

There may be times when you need to change Late Fee settings for individual Tenants. To customize settings for individual Tenants:

1. Click Tenants
2. Right click to access the menu and select Edit Tenant
3. Scroll down to Accounting Defaults
4. Change the Grace Period if needed
5. Click on the paper/pencil to edit the amounts
6. Save Changes
7. Scroll to the bottom or top of page
8. Select Update Tenant 

When Do Late Fees Post to the Tenant Ledger? 

Rent is considered "late" the day following the Grace Period. Example, if there is a 5 Day Grace Period and rent is due on the 1st, Late Fees will begin on the 6th of the month. The accounting default for Late Fees is 30 days. 

1. For tenants on a monthly rental period, Late Fees will automatically post the second month in accordance with their grace period.
   1. If a Tenant is late their first month of tenancy, you will want to manually Post the Charge.
2. For tenants on rental period less than one month (daily, weekly, bi-weekly), you may want to change the default time frame for Late Fees to begin in the Accounting Defaults if you would like the Late Fees to begin the first rental period.
3. The software considers rent due by the due date. Rentec Direct identifies the "due date" as the "interval day" in recurring transaction for rent charges. 
   1. To confirm or edit an interval day (due date)
      1. Go to Settings
      2. Under Financial select Recurring Transactions
      3. Using the search filter in the upper right corner, locate the transaction
      4. Click on the paper/pencil to the right to edit
      5. Under Date Range and Interval, edit the interval day if needed
      6. Update Transaction

Note: If an online payment fails within the grace period, Late Fees will automatically populate. If an online payment fails after the grace period, Late Fees will need to be manually posted. 

Tracking Late Fee Payments

There may be times that it makes sense for your business and bookkeeping needs to track late fee payments separate from standard rental income. If you would like to track the income for late fees separately, you will want to:

1. Create an income category for the payment received. More information regarding creating categories can be found by clicking on this link: Create a Category
2. If you need to pay out the income received as a management fee, you will also want to create an expense category for the management fee.
3. Payments received online that include late fees, will need to be split to apply the correct category. More details for splitting transactions can be found by clicking on this link: split

Customizing Invoices and Statement 

You have the option to add clarification of an increased amount due if paid after the Grace Period. 

To update this setting:

1. Click Settings 
2. Under Program select Program Defaults
3. Scroll to the bottom and select Edit Advanced Settings
4. Under Payment Options, select Yes for Show late fee message on invoices and statements
5. Save Changes.