Back charge definition
/What is a 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; or
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. Given the difficulty of collection, some businesses elect to write off back charges without ever sending an invoice.