Let’s get the bad news out of the way first: For most subcontractors, back charges are a serious threat to profitability and often turn into unexpected costs that drain the bottom line.
These deductions, usually made at project closeout, can cut deep into your margins and sometimes erase them entirely. Whether it’s a vague line item for “cleanup,” or a surprise $5,000 deduction for “schedule delays,” many subs don’t even see it coming.
But here’s the good news: you don’t need a lawyer to protect your business from unfair back charges. You need better documentation.
What Are Back Charges (and Why They Hurt Subs)
A back charge is when a general contractor deducts money from your pay to cover costs they claim you caused, like:
- Rework due to “defective” work
- Cleaning up after your crew
- Paying for missed deadlines or hold-ups
- Repairing damaged work or property
- Covering labor or materials you didn’t provide
In theory, back charges are meant to cover legitimate costs related to on-site issues. In practice, they’re sometimes used to offset other amounts claimed by subcontractors (change orders, delay impacts, or final invoices) especially near project closeout when financial pressure tightens.
The most damaging back charges often show up right at the end of the project, when retainage is released. That final 5 to 10 percent of the contract is usually the subcontractor’s profit, especially on tight-margin jobs.
Take a $200,000 contract with a 5 percent expected margin. That’s $10,000 in profit on paper. If you’re holding back 10 percent in retainage, that means $20,000 isn’t paid until closeout. A $10,000 back charge at that point doesn’t just reduce your margin, it cuts your final payment in half and wipes out 100 percent of your projected profit.
And that’s assuming no other delays or deductions. For many subs, one disputed charge is the difference between a solid job and a break-even one.
The Real Problem: Poor Documentation
Disputing a back charge almost always comes down to documentation. If a GC claims your crew caused damage, cleanup issues, or schedule delays, vague explanations or verbal denials won’t hold up on closeout. Courts and construction law specialists, like McDonald Hopkins, emphasize that solid, specific records (think: time-stamped logs, photos, delivery tickets, and itemized invoices) are essential to validate any claimed costs or to challenge them.
Without that documentation you lose your ability to prove what went wrong, why it wasn’t your responsibility, or how much it should actually cost. That’s why subs who keep organized, photo-backed logs and proof of work are far less likely to get hit with unfair deductions at project close.
7 Documentation Best Practices to Prevent (or Beat) Back Charges
1. Use Daily Logs, Daily
Track who was on site, what got done, what the conditions were, and any issues or delays, every day. Even a 2-minute note matters when someone blames you later.
2. Take Photos of Completed Work
Before leaving a site, snap photos of your completed work—clean, compliant, and timestamped. If someone breaks it after you leave, you’ve got proof it wasn’t you.
3. Keep Digital Checklists for Cleanup and Safety
Cleanup charges are one of the most common back charges. A simple checklist—with a crew sign-off and photo—can prove your team did what was required.
4. Note Exceptions in Real Time
If another trade causes a delay or creates a hazard that affects your work, log it. Even better, attach photos. This protects you from getting blamed later.
5. Log Material Deliveries and Equipment Use
GCs sometimes charge subs for materials or equipment access they claim you didn’t provide. Keep receipts, delivery tickets, and equipment logs, so you can show what was already handled.
6. Use GPS + Timestamps for Signoffs
If your form is signed on-site, make sure it’s traceable. Digital tools like Corfix log exact time, date, and location, so when someone says “your guys didn’t sign off on the JHA,” you can show they did.
7. Centralize It All
Documentation doesn’t help if it’s lost in someone’s inbox or on a supervisor’s phone. Use a platform like Corfix to store everything in one place, searchable by project, worker, or date.
What GCs Want to See (and How to Give It to Them)
General contractors aren’t looking to start fights over every issue. In most cases, they want two things: clarity and credibility. If a sub has a clear record of daily activity, fast response to problems, and clean documentation of what they delivered, they’re far less likely to be hit with back charges.
In fact, many project managers will tell you that back charges often go to the subcontractors who can’t produce a paper trail, not the ones who make the occasional mistake. GCs want to know that if something does go wrong, they can get a straight answer, backed by real documentation.
With clear documentation, especially before anything goes wrong, you build credibility. And when you do need to push back, you can do it with facts, not frustration.
How Corfix Helps Subcontractors Stay Protected
Corfix was built to simplify this exact challenge. We don’t expect your team to be legal experts or spend hours every night filling out paperwork. Our platform makes it easy to capture and centralize the kind of information that helps you stay ahead of back charge disputes:
- Daily reports that can be completed in minutes, right from a mobile device
- Photo uploads that are time- and GPS-stamped for easy verification
- Customizable checklists that crews can sign off on before leaving site
- Document binders for safety manuals, equipment guides, and SOPs, all accessible by QR code
- Audit-ready records of who did what, where, and when
Instead of chasing details at the end of a job, your team can stay organized from day one. And when questions come up, you already have the answers.
Final Word
You can’t stop every back charge. But you can stop being blindsided by them.
Good documentation isn’t about fighting over every line item. It’s about building a paper trail that shows your crew did the work, followed the process, and kept the site clean and safe. That’s what makes a GC think twice before reaching for your retainage.
And if (when) things do go sideways, you’ve got receipts.
Want to see how Corfix can help protect your team from back charge risk? Book a demo.