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The terms box is marked. You need to see which word is checked. The rain is spitting off the edge of the awning above your station, and the driver is tapping their boot on the wet asphalt waiting for your sign-off. You squint at the smudged ink where the dispatcher scribbled notes above the two option boxes, so you hold the page up to the dock light to make out the check mark clearly.
What the bill of lading’s prepaid designation means
Prepaid terms mean the party that arranged the shipment (almost always your supplier, in inbound freight scenarios) has already covered all base freight costs with the carrier before the load leaves the origin facility. You don’t owe the carrier any money for base transport, fuel surcharges, or standard accessorial fees listed on the original bill of lading when you sign for the delivery. Any damage or shortage claims you file later are addressed directly between your supplier and the carrier, unless your purchase agreement explicitly states you handle those processes internally. You still need to document any damage or missing items at the time of delivery, of course, to pass that documentation along to your supplier so they can file their claim with the carrier in a timely manner.
How collect terms shift cost responsibility to your team
Collect terms mean your organization is responsible for paying the carrier directly for all costs associated with the shipment, once the load is delivered to your dock. The supplier paid nothing to the carrier when the load was dispatched, and the carrier will send an invoice directly to your accounts payable department within 10 business days of delivery confirmation. You are also responsible for documenting any accessorial fees the driver adds at the time of delivery, like liftgate use, inside delivery, or residential delivery surcharges that were not disclosed before the shipment was scheduled, so your AP team can reconcile those charges against the quoted rate you received before the shipment was scheduled. Illustrative example: A $1875 less-than-truckload shipment of raw aluminum extrusions from your Ohio supplier marked collect means your AP team will receive the carrier’s invoice for that full amount, plus any applicable surcharges, instead of the cost being rolled into the supplier’s invoice for the raw materials. You may also be responsible for filing any damage or shortage claims directly with the carrier for collect shipments, depending on the agreement you have with your supplier, so you keep a copy of the signed BOL and any damage photos in your shared drive for easy access later.
Common edge cases that muddle terms designation
Sometimes shippers mark a third option, “third party bill,” that falls between prepaid and collect, so you check the fine print below the terms box to confirm if that designation aligns with the billing arrangement your team set up with a third-party logistics provider. Other times, the check mark is smudged, or the dispatcher checks both boxes by accident, so you can’t assume the first legible word you see is the correct designation. You might also see handwritten notes scrawled in the margins that adjust the terms, like “prepaid for first 100 miles, collect for remaining transport” so you cross-reference those notes against your internal delivery confirmation before signing the proof of delivery. In rare cases, the terms box is left blank entirely, which means you need to confirm the correct terms with both your purchasing team and the carrier’s dispatcher before you sign for the load, to avoid being stuck with an unexpected invoice later.
Steps to verify the marked term matches your purchase order
- Pull up the corresponding purchase order number listed in the top right corner of the bill of lading in your internal inventory system, and navigate to the freight terms section of the PO.
- Compare the term listed on the PO directly to the checked box on the bill of lading, making sure to note any discrepancies between the stated PO terms and the marked BOL terms, even small ones like a missing note about third-party billing.
- Confirm that any accessorial fees listed on the front of the BOL are explicitly approved in the PO, or were communicated to your team by the supplier or carrier at least 24 hours before the scheduled delivery window.
- If you use Dock Tally to track inbound shipments, cross-reference the terms listed there against both the PO and BOL to catch any mismatches that slipped through initial scheduling checks.
- Note any inconsistencies directly in the margin of the BOL next to the terms box before you sign for the delivery, so your finance team has a clear paper trail of the discrepancy when they process incoming invoices.
Actions to take if the checked term does not align with your agreement
First, flag the discrepancy to the driver immediately, so they can note it on their copy of the BOL as well, before you sign for the load. Next, call your supplier’s shipping coordinator to confirm which terms are correct, and ask them to send a corrected BOL via email while the driver is still at your dock if the terms on the physical BOL are marked incorrectly. If you can’t get a hold of the supplier before the driver needs to leave for their next stop, write “terms discrepancy noted, subject to PO confirmation” next to your signature on the proof of delivery, so you are not held to the incorrect marked terms by the carrier. You then forward a scan of the marked BOL to your accounts payable team and your purchasing manager, so they can follow up with the supplier and carrier to resolve the mismatch before any invoices are processed. You also save a copy of the marked BOL to your shared shipment folder, so you can pull it up quickly if the carrier sends an invoice for the incorrect terms later.
Next time you pull up this bill of lading for cross-reference
You pull this document back up when you get a notification from your AP team that they received a freight invoice for this shipment that doesn’t match the PO terms. You compare the notes you wrote in the margin of the BOL to the invoice line items, to confirm if the billed terms align with the agreement you reached with the supplier after the delivery was completed. You also pull the scan of the BOL you sent to your purchasing manager, to cross-check any updated terms they confirmed with the supplier after you flagged the initial discrepancy. If the invoice matches the confirmed terms, you sign off on the invoice approval request and send it back to AP, making a small note in your shared folder that the discrepancy was resolved. If not, you forward a copy of the marked BOL to the carrier’s billing department to note the mismatch, and wait for their adjusted invoice to come through before you take any further action. You may also pull this BOL up if your supplier sends an invoice that includes freight charges that were supposed to be covered by their team, to prove the terms were marked prepaid on the delivery document you signed at the dock. You don’t need to dig through old email threads or PO versions when you have the signed, annotated BOL in front of you, as it serves as the official record of the delivery terms agreed to by all parties at the time the load was dropped off.