BACKCHARGES: THE DEDUCTION WITH NO REVENUE.
A backcharge is a deduction taken from your pay app, and it has no revenue behind it. On a $60,000 job at a 22 percent gross margin, the job earns $13,200 of gross profit, so a single $4,500 backcharge takes 34 percent of it. Three habits control backcharges: record the cause on the day it happens, ask for backup before you accept the deduction, and track every backcharge in its own cost code so a GC's history is visible.
Most subcontractors accept backcharges they cannot check, because the pay app is due and the deduction comes with a one line explanation. A written request for backup, with a date and a photo from your own daily log, turns that line into a documented question. The money side counts most: a deduction reduces cash in the same pay period, and one nobody disputes becomes a permanent cut in margin.
WHAT IT MEANS.
A backcharge is an amount a general contractor deducts from a subcontractor's payment for a cost the general contractor says the subcontractor caused or owes, such as cleanup, damage repair, delay or work done by another trade.
This page covers the money side of a backcharge: what it costs, how to record it and how to price for it. What your subcontract allows is set by the clause you signed, so read that clause before the first deduction comes.
WHERE THE MARGIN GOES.
The deduction comes with the pay app
A backcharge appears as a lower payment, often with one line of explanation, and the pay app is already approved. The cash is short in that period, and the job's profit drops by the full amount because no revenue offsets the cost.
Nobody tracks them by GC or by cause
One backcharge on one job is a cost. The same GC deducting on six jobs is a pricing input. Without a record by GC and by cause, the history stays invisible and the next bid includes no allowance for it.
The cost is recorded in the wrong place
A backcharge netted against revenue makes the job's margin look normal, and one dropped into overhead spreads the loss across every job. In both cases the WIP schedule shows a job that is healthier than it is.
WHAT IT LOOKS LIKE IN DOLLARS.
A $60,000 job at a 22 percent gross margin earns $13,200 of gross profit. A $4,500 backcharge is 34 percent of that. The crew finished on budget and the job still lost a third of its profit.
Three $4,500 backcharges across $600,000 of annual billing come to $13,500, which is 2.25 percent of revenue and about 10 percent of a 22 percent gross margin.
WHAT WE CHANGE.
The daily report records who directed the work, what was in the way, and which trade was involved, with photos. A dated record from your own crew is the first thing a backcharge conversation needs.
A request in writing asks for the date, the itemized cost, the cause and the cost basis. Compare it to your daily log and respond before the pay app closes. A deduction nobody questions is treated as accepted.
Backcharges post to a separate cost code, so the job shows the real margin and the report shows each GC's total. For a GC who deducts often, the bid includes an allowance, and the subcontract can ask for written notice before any deduction.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we do the bookkeeping and the controllership as well. Your office stops answering coding questions and stops fixing a reconciliation that will not balance on the last day of the month.
We do the books. No payroll.
Every job shows its margin while it is still open.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the books, the job costing, and the software. No payroll.
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