Back charge

A back charge is an invoice sent to a customer, billing for an expense incurred by the seller in a prior period. A back charge is issued for one of the following reasons:

  • An error was discovered in the original billing, and is now being corrected

  • The seller received a late billing from a supplier, which it is passing through to the customer

  • The original sales agreement with the customer mandated a late billing

Back charges are to be avoided, since they are more difficult to collect from customers. Customers expect to receive supplier invoices sooner, and so will not expect a back charge to arrive at a later date.

Related Courses

Bookkeeping Guidebook 
New Controller Guidebook