Yes, I already know these steps. These are the steps in creating a new item particularly to creating a penalty item. But what I meant is creating a compounding penalty. For example, one tenant has one outstanding invoice. On the current invoice, I added a 3% penalty due to the outstanding invoice. But on the situation when a tenant has two or more outstanding invoices, we use penalty compounding monthly (interest). Meaning, it's more than 3% (or 3% per outstanding invoice). 

We are condominium association billing our tenants monthly for association dues. If unpaid more than two months, they get penalty compounding monthly.