Do You Know Your Freight Billing Terms?
As many as 22 percent of LTL bills of lading (BOLs) are inaccurate, according to recent estimates. Accurate freight bill processing is the lifeblood of every trucking company. Without it, your company will run into problems getting paid quickly and accurately and will have to deal with unhappy customers.
Accurate freight bill processing starts by working with a trusted freight bill entry and freight rate audit company such as DDC FPO, who ensure that accuracy, timeliness and cost-effectiveness (critical factors to freight bill processing) are met. In order to work effectively with such a company, accurate freight bill processing requires an understanding of common industry vocabulary. Here's a look at some of the top terminology you might encounter and why these terms matter when working with a trusted freight bill entry and freight rate audit company.
Bill of Lading (BOL): The freight BOL is a legal document between the carrier and the shipper outlining the contract for carriage of the freight and serves as title to the goods. It identifies the shipper and consignee, origin and destination, as well as terms of the agreement. The most import sections on a BOL includes a description of the goods to be moved, as well as the NMFC classification for LTL freight. Freight that is not classed properly by the shipper could result in delays in transportation and higher rates.
A BOL will typically include:
- Shipper name & address
- Consignee name & address
- Pickup date & due date
- Carrier info/SCAC
- Freight terms
- Purchase order/reference number
- Pro Number
- Load Number
- BOL Number
- Billing address
- Freight type & description
- Freight quantity & weight
- Packaging type
- NFMC class
- Special instructions from the shipper and/or consignee
- Shipper & consignee signatures
- Trailer number
- Seal numbers
Why it matters: A freight BOL is a receipt distributed by the carrier after the goods are loaded onto the container. A copy of the BOL should accompany any packaged freight. The BOL receipt can be used as proof of shipment for the carrier, as well as used for customs and insurance needs. An accurate BOL helps carriers generate a clean, collectable invoice, which shortens the order-to-cash cycle.
Freight Invoice: The invoice may carry much of the same information as a BOL, but it's not a legal contract for carriage. The invoice indicates the amount the responsible party owes for the freight shipment. It's an accounting document, not a legal document. Freight charges and any accessorial charges will be indicated on the invoice.
Why it matters: An accurate invoice starts with an accurate bill of lading. Problems with the invoice will result in a delay in payment.
Accessorial Charges: These are charges over and above the transportation costs for services such as inside delivery, residential delivery, storage, fuel surcharges, etc. Accessorial charges are among the top problem spots in freight bill audits.
Why it matters: These charges allow carriers to recapture their costs for premium services.
Classification: Each LTL shipment is allocated an NFMC classification number that's used to assign accurate freight rates. There are 18 standard freight classes that take into account dimensions, handling and stowability, and 11 classes based on density. Choosing the wrong class costs time and money. Freight rate audit services can help ensure the correct class is assigned.
Why it matters: Incorrect classification usually results in a lower freight charge without any reduction in operating costs. Ensure freight is classified properly to avoid a loss of revenue and customer misunderstanding.
Freight Contract: A legal document between shippers, carriers and third parties. The terms of a transportation contract may supersede the standard conditions of a BOL.
Why it matters: A shipper may have a contract with carriers that contain more details on the handling or service levels, than what is contained in the BOL. Carriers must understand and meet contract terms, as well as the basic services outlined in the BOL.
Imaging: Freight bill entry services convert paper billing into digital images for faster turn-around times, accurate processing, storage and retrieval.
Why it matters: Imaging digitizes and creates a centralized repository for storage and access by anyone with credentials from any location, thus saving time, money, and strengthening customer service.
Overage, Short and Damaged (OS&D): Situations in which there is a discrepancy between the BOL and the actual freight load.
Why it matters: An OS&D claim is a legal action for compensation from a carrier for loss or damage to goods allegedly caused by the carrier. Any OS&D issues should be noted on the BOL at delivery, pickup, or interchange.
These are just a few of the terminology concepts that govern freight bill processing. As you can see, accuracy, timeliness and cost-effectiveness are critical to this process. Be sure to work with a trusted freight bill entry and freight rate audit company like DDC FPO who will make sure that your freight bill processing is a competitive advantage today.
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