Late Fees

The property management software is designed to automate processes such as applying late fees when payment is not received by your grace period. You can configure this so that they apply to every tenant as well as customize tenant exceptions.

Default Late Fee Settings

The default late fee settings tell the system when to post late fees on ledgers and the daily, monthly, and maximum amounts set in your standard lease or rental agreement. 

In your Rentec Direct account: 

1. Click Settings.
2. From the Financial Settings chose Accounting Defaults.
3. Customize the following:
   1. The 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 be charged on the 5th if no payment has been made to bring the account current. 
   2. The default monthly late fee: If a tenant's balance is still negative after the grace period (if defined) this monthly late fee will be charged to the tenant. You may specify a flat dollar amount like 25.00 or a percentage like 5%. 
   3. The default daily late payment (if applicable): If a tenant's balance is still negative after a grace period (if defined) this daily late fee will be charged to the tenant after the specified grace period or the day following the monthly late fee. Daily late fees may be specified as a flat dollar amount. 
   4. The maximum total monthly late fee: This field allows you to specify the maximum late fee total charges a tenant will receive in a month. For instance, if you set the monthly late fee at $30, daily at $10, and maximum at $50 the tenant will receive one monthly 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 110 charge for all non-rent tenant charges. You are able to create a custom late fee category, allowing you to create category ledger reports to track late fee charges. More information on creating your own custom late fee product category can be found here: Customize and Add Other Tenant Charges

System Note: These default options apply to new tenants you place in a property only. They do not affect any current tenants in the system. Instructions to change or customize late fee settings for your existing tenants can be found below. 

When Do Late Fees Post to the Tenant Ledger? 

The software considers rent due by the due date. That means if payment is not received by that date the clock begins on the grace period. For example, if rent is due on the 1st and you want the tenant to receive a late fee on the 5th, set your grace period for 4 days. 

The exception is during the first month of moving a tenant into a property. Typically tenants pay move-in costs (first, last, deposits, etc..) and the system takes that into consideration and will not charge a late fee until the second month regardless of the ledger balance. If a tenant is late in their first month of tenancy, a manual charge will need to be posted. 

Note: The daily late fee will apply if there is any outstanding balance (this includes rent and any other previous or current month's charges). This charge will post daily until the tenant's balance is positive. However, the daily late fee will not populate if the only balance remaining is a current month's late fee. 

Tracking Late Fee Payments

If it makes sense for your business and bookkeeping needs to track late fee payments separate from standard rental income follow these instructions.

In your Rentec Direct account: 

1. Click Settings.
2. Choose from the Financial Settings choose Income & Expense Categories.
3. Click New Category.
   1. Enter a description for your category(example: Late Fee Income).
   2. Set the Type as Income.
   3. Click Post New Category to save. 

When you are posting a payment (income transaction) to your tenant's ledger, be sure to split the transaction between Rental Income and this Late Fee Income category. 

Note: If you received funds from tenants electronically (ACH, Credit Card, Cash PayNearMe) and wish to categorize the late fee payment, you will need to manually edit and split that transaction.

More information on splitting transactions can be found here:  Entering a Split Transaction

Customizing Invoices and Statement with a Late Fee Message

You have the option to add a late fee message to invoices and statements explaining that a late fee will be imposed after the grace period ends.

In your Rentec Direct account: 

1. Click Settings. 
2. Choose Program Defaults.
3. Click Edit Advanced Settings at the bottom of the page and click OK. 
4. Choose YES for Show late fee message on invoices and statements.
5. Click Save Changes. 

Tips for Property Managers: Keeping Late Fees as Convenience Fees

If you keep late fees as convenience fees for your property management business, refer to this help article:  Property Manager- Paying Out Convenience Fees/Late Fees

Late Fees Not Posting Properly

If you have noticed a late fee is not posting property, refer to the following article:  Tenant Late Fees are Not Posting