How are fees calculated?
Fees are calculated on outstanding/unpaid amounts and on amounts that were paid late
- Invoice
- Chart of Account (COA) and
- Rule
- Note: Line items with the same COA will be grouped
- Amount of Days late divided by 365
- Multiplied by (Daily percentage) + (optional - Bank Rate)
- Multiplied by Amount overdue
Scenario:
So, monthly rent is $2420. The company is rate is 9.5% (and 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.
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.
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 uses the "payment date" not the processed date.
Are credit notes considered?
Credit note allocations are treated like payments, the allocation date is what is used for the calculation
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.
What happens when I change the rule rate or bank rate?
When calculating fees the latest version of the rule is applied.
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- Historical changes to the rule wont 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 wont 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.
- There are 2 ways you can edit a Bank Rate:
- From Late Fee Rules > Bank rates > Select 3 dots next to Bank rate > EDIT
- From Late fee rules > Current rules > drop down required rule > select pencil on Fee rule section > select Bank rate field.
- If you do edit a Bank Rate that is associated with an "Active" current Fee Rule you will receive a pop waring link the one below:
For more on creating and editing Bank Rates see article: Creating Late Fee Rules
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.
- A rule must have an income COA, at least one or many which is used for creating late fee. 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 is late fees being generated for the same overdue invoices.
Will fees still calculate once waived?