Compounding penalty is, for example, when Invoice A remains outstanding with an amount of $100, we will show the penalty of 3% on the current invoice B which is $3. If on the next Invoice which is Invoice C (now the current invoice), Invoice A & B is still unpaid, Invoice A has now a compounded penalty of $6 and Invoice B has the penalty of $3 both shown on the current Invoice C. Remember that these are Invoices billed on a monthly basis for each tenant.