Enforcing late fees is never fun. Unfortunately, it’s an essential part of being a landlord.
If you’re enforcing late fees the old-fashioned way, it probably looks something like this: You have a tenant who didn’t pay rent on time, so at the end of the grace period, you start hunting them down. You get into an awkward conversation, listening to excuses for why they didn’t pay on time. Maybe you feel bad and decide to waive the late fee just this once. Maybe you don’t, but when they get you the rent, they don’t include the added late fee, and you decide to just let it go instead of pursuing it further.
For some landlords, enforcing late fees is one of the toughest parts of the job, and understandably so. With that said, late payments are a breach of contract, and allowing a late payment without any consequences will usually lead to a tenant taking advantage of you.
Fortunately, there’s a way to handle late fees that makes your life so much easier: property management software.
Here’s how switching to property management software will simplify late fees for you and your business.
Late Fees Are Automated
Collecting late fees in person can be hard to enforce because your tenant can still pay the rent late without including the added late fee. This leaves you with the choice to either continue chasing them to get the fee or save yourself the hassle and let it go.
Property management software, on the other hand, makes late fees automatic. As the landlord, you don’t have to do anything to enforce or collect late fees from your tenants. After a tenant misses a payment, the software will add the late fee charge to their rent payment that’s due, which they’ll be required to pay along with the missed rent.
The software also gives you the ability to customize the late fees according to what your lease agreement calls for. Not only can you set the late fee amount, but you can also set a customized grace period, after which, the fee will automatically be applied. If the late fee and grace period are the same across all your properties, you can set these as defaults to be applied to all your tenants.
Responsibility Is Moved from Landlord to Tenant
With automated late fees, you’ll never have to worry about tracking tenants down, nor will you have to worry about late fees going unpaid.
One of the nice things about using property management software is that it won’t allow a tenant to pay a future invoice until all previous invoices have been paid, including late fees. This makes late fees instantly enforceable and impossible for tenants to avoid.
If you’re enforcing late fees the old-fashioned way, it’s your responsibility to track down your tenants and try to force them to pay. But with property management software, that burden moves from you to your tenants. They have no choice but to pay the late fees if they want to avoid being evicted.
Furthermore, you can set up automatic reminders to be sent out whenever rent is past due. This eliminates any need for you to reach out to your tenants about paying the fee. Your tenants are held completely responsible for getting the payment in, and you don’t even have to lift a finger.
And, if there ever was a situation where you wanted to waive a tenant’s late fee — perhaps it’s the first payment they missed and they have an excuse like a death in the family or a delayed paycheck — they’re required to reach out to you. So, even if you do end up waiving a tenant’s late fee, it’s still your tenant’s burden. Additionally, you can review their request after they reach out to you and then decide what you want to do.
Conclusion
While having a great tenant-landlord relationship is beneficial to your business, it can sometimes get in the way when it comes to enforcing late fees. You’re running a business, and as such, you need to make sure you’re enforcing late fees. However, when you’re doing it the old-fashioned way, that’s easier said than done. Property management software makes it so late fees are automatic, enforceable, and takes the burden off your shoulders. It’s a win-win-win.
