Back Charge

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.

BREAKING DOWN '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.