Credit Security Deposit?

[Holly Barrett]

So I have this scenario:

Tenant early termination, fee = $800 (equal to one month's rent)

Security Deposit = $700 

He is entitled to security deposit as per condition of unit, however he has not paid the early term fee, hence he is not cleared for the security deposit if he owes us $.

He is not grasping the concept of, why can't he just pay me $100 (the difference) and call it a day? I am telling him that he must pay the $800 first (via cozy, takes 5 days to clear w/ACH) and then I will mail him a check for $700 (takes 1-2 days first class). 

My understanding is this must be done for accounting purposes and technically that security deposit is in a separate account than the operating (where rent & fees would go) so it really needs to be two separate transactions. 

Also if I were to "credit" his cozy account $700, showing he would only owe $100, then I am in essence jumping the gun by saying, you got your security deposit back so that would imply his account was all clear, which would not be valid.

Thoughts? What are other options or ways to explain to a tenant that this is non-negotiable, but to help them understand why?