Freight Bill vs. Bill Of Lading: The Difference and Why It Matters

Do you make it a best practice to keep the freight invoice and bill of lading on file? Whether electronic or an image of a paper document, both will assist in ensuring the accuracy of a shipping transaction, especially if that transaction is ever questioned financially or legally. For most shippers, there is confusion on the role and applicability of the invoice vs. the bill of lading.

Fortunately, the experts at Trans Audit can help you gain a relatively in-depth understanding in less than 10 minutes. Let’s take a closer look at the freight invoice vs. bill of lading and learn why these two critical documents matter.

What Is the Bill of Lading?

The bill of lading is an official, required document necessary to move a shipment. This critical document specifically enumerates and names the items that will be transported, the involved parties, and payment terms. Bills of lading are issued by the company initiating the shipment and are given to the provider. The bill of lading is a legal document that can serve as evidence and is admissible in court. The bill of lading offers a range of critical information, including:

  1. Consignee and consignor
  2. Detailed information on all of the items included in the shipment.
  3. Value of the shipment
  4. Precise weight of the shipment
  5. Services requested
  6. Payment terms

This official document is a physical representation of the “agreement” between the shipping company and the shipping provider. It will offer an exact account of how, when, and where the items are to be transferred.

At the same time, the bill of lading acts as a title to the goods and may be used as collateral for a loan. Because of this, it’s vital that all information included on the bill of lading is precise, accurate, and correct. The bill of lading is also essential when questioning charges and requesting refunds for overbilling.

What Is a Freight Invoice?

While bills of lading are legal documents, freight invoices are not. However, the two documents should closely match. The freight invoice details the specific charges and accumulated cost to be paid, inclusive of freight, fuel, and ancillary and accessorial charges. These specific charges are not set forth on the bill of lading. As such, the invoice further clarifies the information presented on the bill of lading and is the mechanism for a carrier to receive payment for services rendered. For instance, if the bill of lading defines where and when a shipment is to be transferred, the freight invoice will identify ancillary charges incurred along this route.

The freight invoice is very similar to invoices your business receives from other professional entities. While the freight invoice may seem less important than the bill of lading, these vital documents should be retained for the long term.

The freight invoice can provide ample insight for improvements to your organization’s logistics process. It is the document most likely to be used by financial advisors, accountants, or any other party looking for detailed accounts of all shipping charges incurred. In other words, freight invoices are regularly relied on as a source of information during freight audits, whereby line item charges are reconciled with carrier contracts and tariffs.

Freight Invoice vs Bill of Lading: Why Do These Documents Matter?

While bills of lading and freight invoices have similarities, they also have differences. The freight invoice is essentially an invoice for fees and shipping charges. On the other hand, the bill of lading is a legal document.

The bill of lading and freight invoice can be used in tandem to create a more holistic image of the agreement between a shipping company and shipping provider. Although the bill of lading outlines the relationship between the shipping company and shipping provider, the freight invoice will go into much more detail of the arrangement’s financial attributes. When used together, you can examine the total cost of a shipment with a company as well as the circumstances resulting in any charges.

Contact Trans Audit to Ensure Your Freight Bills and Bills of Lading Are Accurate

At Trans Audit, we offer a robust Freight & Parcel Post Audit service designed to recoup overpayments, create savings, and generate efficiencies within your supply chain. Through our proprietary systems and processes, we establish recurring feeds of information, inclusive of freight invoices, bills of lading, rates, contracts, and payment details to perform a retrospective and recurring post-payment review. We employ unparalleled information technology and an unsurpassed team of subject matter experts to create recoveries and value across all modes of transportation in all places.

Contact Trans Audit today to learn how we can help.