In my park rents are due the 1st of the month and late after the 5th of the month. Late fees include a $25 penalty for being late, plus $5 per day going back to the first. So, if you pay on the 7th its $25 penalty plus $35 late fees for a total of $60. This is done as a steep penalty solely to get people to pay on or before the 5th. Pay on or before the 5th and you have no late fees or penalties.
I have a system set up whereby tenants pay their rents directly to a bank just down the street from the park. All tenants get an invoice prior to the first of the month with their amount due and they are aware of the late fee policy. What happens with a handful of tenants is they pay after the 5th but only pay the original invoice amount with no late fees. Nobody at the bank is going to remind them they owe late fees (trust me, the tenants know but just are trying to skirt the system). Then, it becomes a vicious cycle whereby I invoice the following month for previous late fees, they fight the system, blah blah blah.
I can fight the late fee battles with them in court, but my real question is does anybody have a system in place to promptly remind their tenants they owe late fees? Things such as reminder letters after the 5th, emails, etc…? What works best, if anything at all. It just seems in some ways it would be easiest to nip this immediately but I also don’t want the hassle of continuing to send out notices, etc… On the flip side, I could just accept the fact and take the $3-5k per year we get in late fees. It just seems a lot of wasted time is spent around collections of late rents and fees. Plus, the way our late fees are set up it is about $150 per month so once a tenant gets behind a month or so they can never catch back up.
Thoughts?