What is FIFO?
FIFO stands for "First In, First Out." In rental management, any payment made by a tenant is automatically allocated to the oldest outstanding installment.
Why FIFO is Better Than Manual Allocation
- Fairness and transparency: Each payment is allocated objectively
- Easy accounting: Clear records any auditor can understand instantly
- Fewer disputes: Tenant knows exactly which payments are settled
- Legal protection: Documented records support the owner in legal proceedings
Practical Example
If a tenant owes January, February, and March rent (3,000 SAR each) and pays 5,000 SAR: FIFO allocates 3,000 to January (fully settled) and 2,000 to February (1,000 remaining). Outstanding balance: 4,000 SAR — clear and accurate.