What Is a Freight Bill? A Complete Guide

April 2, 2020
What Is a Freight Bill? A Complete Guide

Despite all of the technological advancements that we have seen in shipping over the last few decades, errors still happen. Items may get lost, stolen, or damaged in transit. This is an unavoidable part of the process. 

The only way to protect your business from shipping errors is by ensuring solid communication along each point in the supply chain. Consignors (senders), shipping parties (carriers), and consignees (recipients) all need to have proper hand-offs and agreements when exchanging goods. That way, when something goes awry, responsibility can be properly administered. 

For this reason, the freight bill is one of the most important documents in any exchange of goods. In this post, we’ll provide an overview of the freight bill, explaining why it’s so important, what it usually contains, and more. 

What Is a Freight Bill?

A freight bill serves as a binding legal contract between a consignor and a carrier. This document should contain all of the details of the transaction, including inventory and who’s responsible for payment. 

The main purpose of the freight bill is to determine who the carrier should bill for shipping services. This is typically determined in the shipping contract. In some cases, the sender is billed. But in other cases, the bill goes to the recipient. 

Who Reviews a Freight Bill?

The freight bill is an accounting document. As such, it is typically reviewed by accounting representatives. 

In the past, freight bills were completed on paper or emailed to the proper personnel. Today, the process is mostly digital. A freight bill may be transferred securely via the cloud, over a mobile app or secure payment portal. 

The important thing to remember is that a freight bill is a serious legal document that should never be handled by an unauthorized individual. Doing so could put the company at risk. It could also make the company responsible for incorrect orders. 

When Do You Sign a Freight Bill?

A freight bill should never be signed before or during transit. Receiving a notice to sign a freight bill in advance to save time is an indicator that something possibly went wrong during shipping and the carrier is trying to avoid liability. 

A freight bill should only be signed after inventory is thoroughly inspected and unloaded. 

How to Sign a Freight Bill

Signing a freight bill is not hard. But it’s important not to rush the process or leave anything to chance. 

Remember: A carrier legally cannot leave the scene of a delivery until the freight bill is signed and completed. Take your time. Make sure that you go through the following steps. 

1. Inspect All Boxes and Cartons 

Open boxes and cartons, looking for signs of damage that may have occurred in transit. Write down every possible detail, even if the carrier maintains that the item was damaged before shipment. At this point, your only job is to record information—not to point fingers. 

Some companies choose to be extra careful and record a description of all items at the time of shipment. Pictures may be taken too, for further evidence. 

Check your contract before inspection. That way, you will be aware of the policy regarding damaged items. You’ll also know your rights and responsibility. 

In some cases, the carrier will have to take the item back immediately. Or it could be your responsibility to process or dispose of unwanted items.

2. Take Thorough Inventory 

As you go through each box, make sure to inventory each item and keep a careful record. 

Remember that, during this process, you are transferring responsibility for the goods. So, if something is missing, it needs to be reported. 

3. Sign the Document 

After you have carefully examined the shipment and taken notes on the condition of your items, it’s time to sign the freight bill. 

Read the document carefully—especially the fine print. This is even more important when you are dealing with new shipping partners that you haven’t worked with before. 

4. Call to Report Any Problems 

If you discover any discrepancies during inspection, it’s a good idea to call both the sender and the freight company to report the issue. 

You should also receive an exact receipt from the carrier at the time of signing. This is very important if you are dealing with a paper transaction. In the past, there have been cases where paper freight bills were either manipulated, lost, or damaged. Do your due diligence to protect yourself and your company from nefarious or careless behavior. 

Key Things to Consider 

At this point, you should have a basic understanding of what to expect when signing a freight bill. However, there are a few more things to consider during this process. 

1. There Can Only Be One Freight Bill

A carrier should never ask you to sign duplicate two or more freight bills. There can only be one legally binding freight bill. 

If the carrier asks you to sign another document at the time of signing, make sure you carefully inspect it to make sure there isn’t any jargon that can nullify your freight agreement.

Some carriers will try to intimidate or manipulate receiving parties into signing away responsibility for shipping. Others may even threaten to hold inventory if the receiving party does not comply. 

Any suspicious activity should be immediately reported to the proper authorities if this happens. 

2. A Freight Bill Is Not a Bill of Lading

A freight bill should not be confused for a bill of lading. While these two documents are similar, they serve different purposes. 

The word “lade” refers to loading a vessel (e.g., a shipping container). As such, a bill of lading is a document that’s signed by the sender and the carrier immediately after cargo is loaded. 

A bill of lading can’t replace a freight bill. Both are equally important items, and should be treated separately. 

3. Concealed Damage May Occur

Oftentimes, items will be found to be in bad shape after a freight bill is signed. When this happens, it’s called concealed damage. 

Companies tend to have different policies regarding concealed damage. The main thing to keep in mind is that consignees accept full responsibility for all items, once they sign a freight bill. When this happens, you will most likely have to file a separate concealed damage claim with the freight company as a separate transaction. 

This is why it’s so critical to pay close attention during the inspection process. Concealed damage claims can be time-consuming. They can require a significant amount of back-end work—especially for expensive or precious items. Typically, you will have to keep the packaging, take photographs, and make careful notes that detail what was wrong with the item and why it wasn’t discovered and reported before signing the freight bill. 

To protect yourself, it’s always a good idea to write “subject to inspection” on a freight bill. 

4. Consider Digitizing the Process 

As you can see, the freight bill is an important document—one you shouldn’t rush through. In fact, it’s one of the most important documents that you will handle on the job. As such, it pays to be methodical—even if it draws the ire of the carrier that you’re working with. 

One way that you can streamline the process is to digitize the freight bill—making it accessible across mobile devices. Doing so will make it easy for both the carrier and the receiving manager—saving time and reducing risk along the way. 

Learn how Vector can help you get started

This post was written by Justin Reynolds. Justin is a freelance writer who enjoys telling stories about how technology, science, and creativity can help workers be more productive. In his spare time, he likes seeing or playing live music, hiking, and traveling.

Accelerate your fleet operations.
See how Vector can streamline your mobile and back office workflows.
Get in touch