Back Charge

AAA

DEFINITION of 'Back Charge'

A billing made to collect an expense incurred in a previous billing period. A back charge may be an adjustment due to an error, or it may be to collect an expense that was not billable until a later period due to timing issues.

INVESTOPEDIA EXPLAINS 'Back Charge'

When possible it is best to avoid having to back charge for products or services. Because back charges may be unexpected by customers and can be confused with billing errors, they often take longer to collect. In general, the more promptly a company can bill a customer, the higher the probability of collecting the amount billed in a timely manner.



RELATED TERMS
  1. Accounts Receivable - AR

    Money owed by customers (individuals or corporations) to another ...
  2. Charge-Off

    A term describing an expense on a company's income statement. ...
  3. Default

    1. The failure to promptly pay interest or principal when due. ...
  4. Sales Charge

    A commission paid by an investor on his or her investment in ...
  5. Collection Agency

    A company hired by lenders to recover funds that are past due ...
  6. Accident Year Experience

    Premiums earned and losses incurred during a specific period ...
Related Articles
  1. Credit & Loans

    Watch Out For Changes In Credit Card Agreements

    If a credit card company changes its terms, you could pay a steep price. Find out how to stay informed.
  2. Credit & Loans

    How To Dispute A Credit Card Charge

    Follow these steps if you've been ripped off or spot an error on your bill.
  3. Options & Futures

    The Ins And Outs Of Bank Fees

    These service charges could nickel and dime you right out of your nest egg.
  4. Options & Futures

    How To Break Up With Your Bank

    Whether you're moving or have just found a better no-fee plan, find out how to switch banks with ease.
  5. Credit & Loans

    The History Of Consumer Credit Rights

    The Fair Credit Billing Act of 1974 gave consumers the power to dispute credit card charges.
  6. Delivery duty paid (DDP) is a shipping term.
    Investing

    What does DDP Mean?

    Delivery duty paid (DDP) is a shipping term specifying that the seller is responsible for all costs associated with delivery of the goods to the buyer. It is usually used when goods are exported ...
  7. Fundamental Analysis

    What is a good interest coverage ratio?

    Learn the importance of the interest coverage ratio, one of the primary debt ratios analysts use to evaluate a company's financial health.
  8. Fundamental Analysis

    What is a bad interest coverage ratio?

    Understand how interest coverage ratio is calculated and what it signifies, and learn what market analysts consider to be an unacceptably low coverage ratio.
  9. Active Trading Fundamentals

    What is liquidity risk?

    Learn how to distinguish between the two broad types of financial liquidity risk: funding liquidity risk and market liquidity risk.
  10. Technical Indicators

    What is a good gearing ratio?

    Understand the meaning of the gearing ratio, how it is calculated, the definition of high and low gearing, and how they reflect relative financial stability.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center