Many people ask me about adding freight to invoices and the legalities of it. This is a good topic as many companies use a simple line item to cover the cost of freight, pay for departmental expenses and even to make a profit.
Shippers must be careful how they indicate this on their invoices though. What a lot of people do not realize is that if a shipper indicates "Freight" or "Freight Prepaid & Added" on an invoice, they are required to pass along the actual freight charges on the invoice. And the "truth in billing" provision of the ICC Termination Act (49 U.S.C. 13708), which requires carriers to disclose the actual charges on their freight bills and indicate any off-bill allowances, assures that no fake back-up can be provided.
However, shippers can easily protect themselves if they simply change the wording on their invoices to "Shipping & Handling". This implies to the payer of the goods that other costs, along with freight, are being charged to them.
If your company is charging freight plus incidentals and indicate this by simply putting "Freight" on your invoice, change it today to "Shipping & Handling". Right now you are open to scrutiny by your customers. If you are on the other end of this and are being charge for "Freight" and are concerned about being over-billed, tell your vendor to come up with a freight invoice as backup. If the charges do not match up, you have every right to get a refund of the difference.
NOTE: It is not the "rule" but it is generally better to have your freight billed collect from your vendors. Since many shippers do charge "Shipping & Handling", even if your vendor has a better freight deal, it could still pay to ship it collect to avoid the extra handling charges.
I hope you find this helpful to your business!
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