Accuracy, transparency, reliability, authentication, and verification lay the foundation for the success of an accounting system in any business enterprise. The shipping industry is also no stranger to this proposition. Freight movement is a highly coordinated and regulated component of the supply chain and logistics industry. This industry involves the transfer of commodities in bulk which bear heavy cost & revenue implications to both the consignee and the shipper. This affirms the need for an effective and error-free freight invoice management system. Implementing the same develops into a core competency that reinforces faith in the stakeholders of the supply chain.
Precursor To Good Invoicing Practices
The first step to effective freight invoice management starts with the acceptance of an agreement between both the consignor and the consignee. This agreement comes into existence post acceptance of the export quotation by the buyer or consignee and subsequent issue of the purchase order by the buyer to the seller i.e. consigner. The freight invoice generated upon delivery of the consignment to the consignee can be validated against the agreement by checking for the following parameters-
- Exclusive mention of the consignor and consignee’s name, address, and contact details.
- Pickup and delivery port along with the shipping date.
- A complete description, quantities, specifications (dimension, weight, colour) and price of the products contained in the consignment.
- All the charges (both advance and the balance) and the currency used for the transaction.
- Transition points of the consignment during movement.
These parameters are specified both in the export quotation as well as the freight invoice which bolsters the overall freight invoice management.
The involvement of a carrier necessitates authentication and validation of the shipped consignment and charges levied for an efficient freight invoice management process. Ensure the following mandatory checkpoints are complied with-
- The exporter or the consignor should explicitly describe the product being shipped, its material and dimension specifications, the number of items, the weight of the consignment, the type of packing, source port, destination port, transition details, and consignee details.
- The consignor and the carrier should both affirm the consignment details and sign the same to produce the Bill of Lading.
- There must not be a mistake of any form in the details being entered into the bill of lading. If the product is plastic plates, but on the document both the parties have signed for copper plates in the bill of lading, then the carrier cannot be sued upon.
- Upon receiving the consignment, the consigner should accept the consignment only if the bill of lading mentions the components as decided upon in the export quotation. In case of any deviation, the consignment should be rejected.
The Twist and The Tip
The carrier issues an invoice to the consignor for the freight movement upon the successful delivery of the consignment. The carrier levies charges based upon the description that was signed upon by both the consignor and the carrier and issues the freight invoice. The consignor is now liable to release the payment against the invoice raised by the carrier because the delivery has been successful. This leads to a twist, if the commodity transported was wrongly described and was still signed for by the carrier, consignor, and also the consignee. But the commodity that was shipped and delivered was exactly as per the export quotation’s description, then there arises a situation in which the financial interests of either of the stakeholders get compromised sometimes even without realizing it at the right point of time. Such blatant mishappenings can be averted with the following tips and tricks for smooth and effective freight invoice management-
- The contract i.e. bill of lading is validated against the export quotation and cross-checked.
- Freight invoice issued upon successful delivery is verified against the bill of lading.
- The consignor should check with its team that there is no repeat payment against any of the components of the invoice.
- The charges are levied only as per the rates agreed upon between the consignor and the carrier.
- Transactions and invoices should be properly recorded.
Management of your shipping costs, finances and your freight invoices can be performed by many third-party vendors & marketplaces. You can find one here- https://www.cogoport.com/manage-cash. Proper and watchful freight invoice management protects the financial interests of all the parties and also complies with the laws and regulations of the government for the benefit of the entire ecosystem.