Interest on Amount Owed Calculation

We wish to remind everyone that starting this month (April 2015), we will be charging interest on any receivable balance.

After testing the software, we would to like to clarify the way it works as it might be a bit confusing.

We previously announced a 2% interest rate per month. However, the software, actually, uses 24% per year and a calculation on a per-day basis. This means that, in months with 31 days, the amount of interest charged will be slightly more than a shorter month.

This is how the calculation works:
                 o There is a “free” period until the 10^th of the month.
                 o If the account is paid in full before the 10^th there will not be interest charged.
                 o If there is any balance after 10 days, interest will be charged on the basis of the amount              
                    owed on a day by day basis.

       o The Interest charge will be added to the account on the first day of the following month.

 This is a real life example of one of our accounts in our test.

Real Life Test Scenario based on Actual March:

· Account owed $8.04 at the end of February.

· Condo Fees of $327.82 were added to account on the 1^st of March.

· New balance was $335.86 as of March 1^st.

· Amount paid on March 6^th was $327.82

· Balance on March 31^st was $8.04

Even though there was only a small amount owed, the “free” period had expired and interest is calculated on what is owed day by day.

Calculation

$335.86 X 24% / 365 x 5 days = $1.11
                   PLUS
$8.04 X 24% / 365 X 23 days =   $0.13
Total                                            $1.24

Implication

Therefore, even though the amount owed is only $8.04 at month end, it was carried over from the previous month. Therefore the “free” period had expired and the interest charge will be $1.24 based on the daily balance. However, had the $8.04 been paid in full going into the month, there would not have been any interest.

Needless to say, starting now, it is very important to be sure you do not owe the syndicate anything as these charges are calculated automatically by the system and can add up quickly. We will send anyone who owes us money a statement next Tuesday.

Please pay close attention to any balance owed.