A freight bill is an important component of the shipping process that you need to know about. So instead of signing on the dotted line without a second thought, learn more about what freight bills are and how you should sign them with this comprehensive guide to this confusing shipping concept:
What Is a Freight Bill Used For?
A freight bill is used for the billing of shipping services. It also serves as a legally binding contract between the consignors, consignees, and carriers. In this case, consignors are the senders, carriers are the shippers, and consignees are the recipients.
Is a Freight Bill an Invoice?
While a freight bill may initially look like an invoice, it’s so much more than that since it’s actually a legally binding contract. Like an invoice, a freight bill determines who is being billed for the shipment and how much they are being billed for. It can also outline payment terms, including payment due date and method of payment.
However, freight bills also serve as an accounting document that’s used to make sure that everything in the shipment arrives as it should. It details the number of items in the shipment and a description of them. This information helps the consignees inspect the items and take an inventory prior to signing the freight bill.
Is a Bill of Lading the Same As a Freight Bill?
A freight bill may seem similar to another important shipping document, a bill of lading. Like a freight bill, a bill of lading is also a legally binding document between shippers and recipients. Unlike a freight bill, the purpose of a bill of lading is to establish a relationship between the different shipping parties (consignors, consignees, and carriers) so that the shipment goes smoothly.
And while a freight bill is important when handling a shipment, the bill of lading is the most important document involved in the process and serves as the basis of the entire shipment rather than just the payment or invoice of the shipment.
How Do I Make a Freight Bill?
Even though freight bills contain tons of detailed information, they are actually pretty easy to make if you know what you’re doing. You can either make your freight bill from scratch, use a freight bill template, or use a freight bill generating tool. No matter which approach you use, make sure that the following items are found and filled out on your freight bill:
- Name of cosigner
- Name of consignee
- Date of shipment
- Point of origin
- Destination point
- Number of packages
- Description of freight
- Weight, volume, or measurement of freight
- Assessed rate of freight
- Total charges for freight and handling
- Total changes due
- Name of the carrier(s)
- Transfer point(s)
- Payment terms
How Do I Sign a Freight Bill?
You should never sign a freight bill without a second thought. Instead, you need to be extremely careful when signing a freight bill by following these five steps:
Step 1: Time It Right
Timing is everything when it comes to signing a freight bill. As a general rule of thumb, you should never sign the freight bill before or during transit. You should only sign the freight bill after the items have arrived and you have had time to inspect the inventory in its entirety.
Step 2: Inspect Every Box
Before you sign the freight bill, you need to inspect every box in the shipment. First, check the outside of the boxes for any signs of damage and note down any rips, tears, or punctures that you see. Then, open the box and inspect each individual item to make sure that it wasn’t damaged or broken during transit. Again, if you see any signs of damage — even a tiny little scratch — make sure to note this before you sign the freight bill.
If there are any issues, now is a good time to check your contract with the shipping company to see how they handle damaged items based on their policies. For example, some companies take the damaged items back immediately, whereas others place the responsibility on you to deal with these items.
Step 3: Take Inventory
After inspecting the boxes and products for damage, you need to take inventory before you sign the freight bill. Carefully count each item in the shipment and make sure that this number matches the number found on the freight bill. If there are any discrepancies, make a note of the missing item so that you can report it.
Step 4: Read the Document Carefully
Once you’ve inspected the boxes and taken inventory, you need to read the freight bill in its entirety before signing it. After all, the freight bill is a legal document, and it’s never a good idea to sign a legal document without first reading it and understanding what you agree to. You need to pay close attention to the fine print, as some of the policies written here may prove to be problematic.
Step 5: Don’t Hesitate to Report Discrepancies
Finally, you should go ahead and report any discrepancies found in the shipment based on your detailed inspections and inventory process. You need to contact both the sender and the freight company to inform them of the issue. From there, all parties can work together to solve any issues.
What Do I Need to Keep in Mind When Creating a Freight Bill?
A freight bill is a detailed and important document that requires care and attention. Here are four tips to help you create an acceptable freight bill:
Tip 1: Only Sign One Bill
Since a freight bill is a legally binding document, there should only be one freight bill for each shipment. Two or more documents cannot have legal authority over the same shipment. At the time of signing, make sure to carefully read any and all documents that you are asked to sign to make sure that they don’t effectively nullify the freight bill. Also, don’t let yourself be intimidated or manipulated into signing a freight bill until you’re ready to and feel comfortable with the agreement.
Tip 2: Know Concealed Damage Policies
Another tip involves knowing about any concealed damage policies that may apply to your shipment. Sometimes, no matter how closely you inspect the items in your shipment, the damage is discovered after the freight bill has already been signed. So since you already signed the freight bill and accepted the shipment, are you responsible for the damages?
Most freight companies will allow you to file a concealed damage claim if you discover any damage after the fact. However, these claims can be extremely drawn-out and time-consuming as they involve taking detailed notes and photographs of the damaged areas to provide to the freight company. You also need to explain why the damage wasn’t discovered at the time of signing.
Tip 3: You Can Digitize Your Freight Bill
The process of signing a freight bill can be detailed and complicated, which is why it may help to digitize the process. After all, everything is digitized these days, from credit cards to even driver’s licenses. So why not the freight bill?
Digitizing the freight bill makes it easier for everyone to view it and even sign it. It speeds up the process and also reduces the risk of any errors. Plus, a digitized freight bill is just as legally binding and credible as a hard copy freight bill. If needed, you could always print out a hard copy in the event that you need to make a claim related to damages or missing items.
Tip 4: You Can Use Outsourced Help
Another thing you can do to simplify freight bills is to use outsourced help. While you may not be able to outsource the signing of freight bills, you can outsource the other processes involving them, such as billing and auditing.
For example, outsourcing your freight bills allow you to process payments almost immediately upon signing. This helps you build a better relationship with carriers and shippers as they will come to appreciate your quick payment timeframes. Outsourcing your freight bills also allows you to audit these documents and check them for accuracy or discrepancies. Through auditing, you can make sure that you’re paying the right amount for the right products.
Different Ways to Outsource Freight Processes
If you have determined that outsourcing the freight billing process is the right move for your company, here are the steps you need to follow to establish a beneficial relationship with a reputable third-party company:
Freight Audit Services
Auditing is an important component of any company in any industry, but it’s especially important in the freight industry, where you’re dealing with thousands of products and shipments that total tens of thousands of dollars. Keeping track of all of these different items, shipments, and invoices can quickly become overwhelming. However, it’s important to make sure that you’re getting the right amount of money for the right shipments.
This is where audits come in. And while audits may be the bane of your existence, there are freight auditing services that you can use to effectively outsource this complicated and time-consuming — yet important task so that you can rest assured that you’re paid every penny you’re owed.
Even small discrepancies are worth noting so that they don’t happen again, and you can continue growing your business with the money you earn back.
Freight Payment Services
On the other hand, using a freight payment service can make auditing more unnecessary. This is because freight payment services combine data from several different sources to check for accuracy before a payment is made. For example, these services take your freight invoices, bills of lading, and proof of deliveries to make sure that the payment is actually warranted. That way, you can address any issues before the payment is made instead of trying to get money back after a mistake was found through an audit.
Freight Invoice Consolidation
It’s also possible for you to consolidate all of your different freight invoices so that you’re not paying tens or hundreds of them at any given time. With a freight invoice consolidation service, you only have to worry about paying a single invoice that includes the amounts and information for all invoices within a given time period.
Consolidating these invoices into a single payment can save you a ton of time and money in painstaking paperwork. Furthermore, it can give you a better idea of your numbers without having to add them up. At the end of the day, more data and information is always beneficial for your business, which is why you may want to consider freight invoice consolidation.
Freight Data Analysis
On a similar note, if you want to take advantage of data and information, then you should consider incorporating freight data analysis into your business. There are companies and tools out there that specialize in identifying and tracking relevant key performance indicators (KPIs) related to your business operations. Not only that, but they can also provide actionable feedback that you can use to address any KPIs that are lagging behind your goals.
Some examples of relevant freight KPIs include on-time pick-up and delivery rates, revenue yield, loading and unloading times, border delays, and damages.
How to Outsource Your Freight Needs
Clearly, there are countless ways to outsource your freight needs, and similarly, there are countless companies to outsource with. So how can you find the right partner for your freight needs? For starters, you need to establish what your specific needs are. Are you looking for a freight audit service, a freight payment service, freight invoice consolidation, freight data analysis, or all three? Some companies may specialize in one of the four, while others may handle them all.
Once you have a better idea of what you’re looking for, you can start searching for companies. If you can’t get any personal recommendations from friends, family, or colleagues, the next best place to look is online. Simply search for providers that offer the services you’re looking for and take note of the top results.
From there, you need to do your due diligence to make sure that these companies would actually make good outsourcing partners. The first thing you need to look for is experience. Make sure that they aren’t total newcomers to the freight industry since it can be a complicated and challenging area.
The second thing you need to look for is reputation. Make sure that they have positive customer reviews. Companies get bonus points for winning prestigious awards that reflect on the level of service they offer. If you don’t feel confident making a decision based on this information alone, you can always reach out to them and ask for a list of references that you can personally contact.
The third thing you need to look for is price. While price shouldn’t be the most important factor, it definitely plays a role in your decision-making process. Reach out to your final contenders for a quote based on the services you’re looking for. Prices that are way lower than the rest of your quotes are definitely red flags that you should avoid working with these companies since you tend to get what you pay for.
Conclusion
If you’re looking to outsource to an experienced and reputable freight company, look no further than RPM. RPM has nearly ten years of experience in addition to countless five-star reviews and impressive awards. Our goal is to offer you cost-effective and tailored solutions for your supply chain needs.
We do this by offering personalized digital solutions with features like real-time integrations and onboarding, automated shipment creation, and machine learning that offer total carrier and equipment visibility. These features also include multi-source data aggregation and automated order and payment processing.
If this sounds like what you’re looking for, feel free to reach out to the freight experts at RPM for more information about our top-notch services and to receive a custom quote based on your unique needs.
Sources:
The Role of the Freight Bill in a Transportation Transaction | Small Business Chron
Bill of Lading Definition | Investopedia
10 KPI's You Should Implement in Your Logistics Company | LinkedIn
