19/10/2026
A $350,000 backcharge almost wiped out a subcontractor’s profit on a job.
He was ready to pay it.
Last week, a subcontractor came to me after a general contractor hit him with a $350K backcharge for project delays.
Before he paid, I asked him one question:
“Have you checked what your contract says about backcharges?”
He hadn’t.
We spent three hours reviewing the paperwork.
Here’s what we found.
1. The GC hadn’t followed the contract.
The agreement required specific written notice procedures before issuing a backcharge. Those procedures hadn’t been followed.
2. The delay wasn’t his fault.
Daily field reports showed another subcontractor had caused the delay.
3. The GC had already acknowledged it.
An email from the GC’s project manager, sent six weeks earlier, confirmed the delay wasn’t this subcontractor’s responsibility.
We gathered the documentation and formally disputed the charge.
Five days later, the GC dropped the entire $350K backcharge.
Think about what that means.
The subcontractor was working on a job with a 12% profit margin.
Paying that backcharge would have turned a profitable project into a major loss.
Months of labor, materials, equipment, and overhead could have gone toward covering someone else’s mistake.
For contractors running multi-million-dollar businesses, one disputed charge can have a serious impact on cash flow and annual profitability.
Before accepting a backcharge, check three things:
Your contract’s notice requirements and backcharge procedures.
Your daily field reports to establish what actually happened.
Your emails and written records documenting who was responsible.
Keep those records organized throughout the project. When a dispute comes up, having the evidence ready can make all the difference.
A GC may control your next payment.
You still have the right to review the charge and challenge it with evidence.
Contractors, what’s the largest backcharge you’ve ever had to deal with?
