Learn how write-off a pro-rata payment
What is the pro-rata method? In this video, it shows you how using Hammock you can write off a pro-rata rent payment.
Many landlords may like to receive their rent payment on a set date of the month, which would mean that a tenancy would need to start on the first of the month If you have a tenant who is ready to move in sooner, it doesn’t make sense to wait until the first of the month to have them move into the property.
For accounting purposes you may want to start a lease on the first of the month, however by allowing a tenancy to start on the 14th or 25th for example you can charge them for the days they occupied the property meaning that next month they could start regular payments.
In these circumstances we need to process a pro-rata payment and here is how that is managed using Hammock:
In our example, the regular monthly rent due is £420. The tenant moved in part way through January and a pro-rata payment of £137.60 was due for January, which wasn’t paid in full.
As a result, the Tenancies tab you will see under Rent Transactions page shows it wasn’t paid in full of £282.40 for January which is not due to the landlord.
To correct this:
- Select ‘Add manual transaction’.
- From the ‘Payment Options’ dropdown box select ‘Write-off’.
- Next, add the date the rent payment is due on.
- Finally, we select the amount to write-off, which will equal the full rent minus the amount due for example, this is £282.40.
- Click ‘Save’. Once you saved it, you will be returned to the Tenancies page.
- Now you can see that the rent due for the month has been reduced to the pro-rata amount - £137.60 and the arrears have also been removed.