What is a Back Charge?
A Back Charge is often the result of a mistake made by a subcontractor. It allows a builder to ensure that the party who caused the damages ultimately pays for correcting the mistake.
For example, if a plumbing subcontractor causes a leak that damages the kitchen cabinetry. The cabinetry subcontractor fixes the water-damaged cabinetry and invoices you for the work completed. You do not want this amount to show as a loss on your job budget, as you will recoup the cost from the plumber. You can do this by creating a Back Charge when you receive the cabinetry subcontractor bill.
How to create a back charge:
Once a bill is approved for payment, from within the Edit Bill screen, click the + Back Charge button at the top right of the screen.
Select the subcontractor/supplier you want to issue the back charge/invoice to.
Provide a reason for the back charge.
Use the tick-box selector on the left-hand side to select which Items from the bill you want to create the back charge against and enter the quantity (Qty) and unit price to determine the total Back Charge amount for that item.
Click Save and Create. This will then create a credit against the items on the Back Charge in the job budget and, at the same time, create an invoice in Xero to send to the relevant supplier/subcontractor.
