HausFS advocates a collection policy, including late fees, as a Best Financial Practice for all associations, no matter the size. In general, we also recommend that a flat amount, rather than a percentage, be applied to assessments paid after a certain date. This is because it is generally easier for a Treasurer in a small association to tack on a $25 late fee than to spend the time calculating a percentage-based fee.
Before deciding on your collection policy, however, it's important to review your By-Laws to determine if they contain language specifying how late fees are to be applied. Most By-Laws will simply grant the board the right to impose charges for late payments, but we've seen several that specify a late fee of a certain percentage. The board should be sure that it does not adopt a late fee that contradicts the fees stated in the By-Laws.
