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Harness the Power of Late Fees

Harness the Power of Late Fees

If you’ve been a landlord long enough, you’ve run into this issue. You have a great, long-time tenant, who, every month, pays their rent like clockwork. That is, if their clock runs hours, days, or even weeks behind. That’s right. Late payment is a common problem that creates all sorts of issues for landlords.

However, there are strategic ways to combat this chronic issue. One of the most effective being the employment of late fees. But, for most landlords working to roll them out, it can be tougher than it sounds. Read on to learn more about late fees, common issues associated with late rent payments, and how to effectively use the tool to reduce delays.


What is a Late Fee?

A late fee is an additional charge tacked on to the rental amount for payments that come in past a certain threshold of days. Most landlords give a grace period of 3 to 5 days before adding to the total amount. The fee would typically be a percentage of their monthly rent, anywhere from 2 to 5%.

One common problem that landlords have in the enforcement of their late fee policy is actually holding their tenants to that statute. Oftentimes, if landlords are collecting physical checks or payment is initiated by the tenant, as the perpetrator, they themselves will not willingly pay that additional fee. Rather, the check will come in at the standard rental amount it always does and by the time it reaches the landlord, it feels too late to go back and demand the upcharge.

Late Rent Landmines

All complications essentially stem from this issue of recouping the funds. The biggest quite possibly is the uncomfortable nature of the subject. Again, if a landlord is doing business the old-fashioned way, getting that money back requires him or her to reach out and broach the topic. It also then puts them in the undesirable position of making a judgement call based on the tenant’s excuse for not making rent in a timely manner. Do you really want to be the landlord that called them during their relative’s funeral asking about the payment of a nominal and discretionary fee?

That is, if you are even able to make contact at all. When there is no central hub for your business, online or otherwise, landlords have to resort to piecemeal ways of disseminating information amongst their tenants. And this situation is no different. It can feel like an invasion of privacy from the tenant perspective when their landlord sends them a personal text. But for landlords, there may be no other way to communicate.

Make Late Fees Work for You

The easiest and most effective way to utilize late fees is to do so through a property management software. The form and structure of a professional platform will instantly mitigate most, if not all concerns associated with collecting late fees.

Property management software like Innago is built specifically for landlords and tenants, with all the ins and outs, complications and one-off situations of rental collection in mind. The late fee feature is designed not to bruise or fracture the relationship between the two parties; but rather, to strengthen it. By being upfront and unbiased, the landlord can remain absolved from all judgement while the system does exactly what it has promised and is designed to do. This level of transparency goes a long way in building trust between landlord and tenant.

In addition to enhancing the client relationship, the software will also serve to optimize your business flow. By automating the collection of rental payment, you take chance and guesswork out of the equation, meaning you know precisely how much money is coming and going at a given time. This allows you to confidently manage and grow your business.


Late fees are a powerful tool. But it’s important you know just how to use them for the forces of good and not evil. Enforcing them sporadically or inconsistently can send a strong message, and not exactly the one you are looking to send. Work with the experts and harness the power of late fees effectively to improve your relationships and ultimately your business. And just like that, the clock is working again.


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