This article serves as an educational resource to help you understand how late fees are calculated, the different types of late fees, and the policies surrounding them. We aim to provide you with a clear understanding of late fee procedures to ensure accurate financial management.
FAQ topics in this article:
- How are fees calculated?
- How does the Flat fee - charged once work?
- How does the Percentage - charged once work?
- How does the Annual Percentage - charged daily work?
- How is the Grace Period considered?
- What date is used to calculate late fees?
- Are credit notes considered?
- When can I use Bank Rates?
- What happens when I change the rule rate or bank rate?
- How do you identify overdue invoiced amounts?
- How are Chart of Accounts (COA) used?
- Will fees still be calculated once waived?
- Do late fees have Audit logs?
- Adding tenants to Late Fee rules
Q: How are fees calculated?
Fees are calculated on outstanding/unpaid amounts and on amounts that were paid late Late fees are generated per:
- Invoice
- Chart of Account (COA) and
- Rule
- Note: Line items with the same COA will be grouped
Q: How does the Flat fee - charged once work?
Q: How does the Percentage - charged once work?
Q: How does the Annual Percentage - charged daily work?
- Amount of Days late divided by 365
- Multiplied by (Daily percentage) + (optional - Bank Rate)
- Multiplied by Amount overdue
Scenario:
Monthly rent is $2420. The company rate is 9.5% (and the optional Bank rate is 2%). The tenant is 12 days late:
- 12 (Days late) divided by 365
- Multiplied by 11.5% (including bank rate- 9.5%+2%)
- Multiplied by $2420 (the amount)
- Which calculates to $9.15 for the 12 days late.
Q: How is the Grace Period considered?
This is the number of days grace tenants have to pay after the invoiced due date. Interest will be calculated dating back to the due date if payment is not made within the grace period.
Q: What date is used to calculate late fees?
Paid late is based on the date the money cleared, not the date it was captured or reconciled in Re-Leased. Late fees use the "payment date" not the processed date.
Q: Are credit notes considered?
Credit note allocations are treated like payments, the allocation date is what is used for the calculation
Q: When can I use Bank Rates?
Bank Rates can be created and stored in the late fee rules section at any time. Bank rates can only be applied to the Annual percentage - charged daily for this version of Late Fees.
- Bank Rate field will drop down automatically when Annual percentage - charged daily, rule type is selected.
Q: What happens when I change the rule rate or bank rate?
When calculating fees the latest version of the rule is applied.
- Historical changes to the rule won't be taken into consideration
- If the bank rate percentage is changed on a rule, all pending fees will be recalculated according to the latest percentage and won't take the previous percentage into consideration
Note: For any changes to the rules (e.g. percentage rates or bank rates), it is suggested to generate an interim late fee invoice before making any changes, so that any outstanding fees that are yet to be generated will not be affected.
Here are two methods for modifying a Bank Rate:
- Go to Late Fee Rules > Bank Rates, click the Contextual Menu [...] and choose Edit.
- Access Late Fee Rules, expand the Current Rules, find the relevant rule, click the Edit icon (pencil) within the Fee rule section, and then select the Bank rate field.
Please note, if you adjust a Bank Rate linked to an "Active" fee rule, a pop-up warning similar to the one shown here will appear.
Q: How do you identify overdue invoiced amounts?
Chart of Accounts are used to identify overdue invoices, the COA will look at the line items within the overdue invoice.
Q: How are Chart of Accounts (COA) used?
- A rule must have an income COA, at least one or many which is used for creating late fees. This must have a tax type.
- Note: When choosing the income COA for the rule, take consideration around "selecting ALL" this may add the "paid to" COA and result in generating late fees on late fees.
- A rule must also have a paid to COA, used for where late fees are charged to
- Rules can be assigned to many COAs
- Assigning multiple rules to the same COA will result in multiple fee line items
Note: When you have multiple rules, they do not consider each other e.g. creating rules using the same COA's will result in late fees being generated for the same overdue invoices.
Q: Do Late fees have Audit logs?
Yes we do. Although, we do not have any UI for this just yet. In the meantime, you can request through us for any queries until we have the UI built out.