Too many times a company does not learn about bills of lading until it is too late and they have experienced a significant business loss. Yes, this happens as a result of not taking advantage of a proper bill of lading. A bill of lading can help protect you and your company’s assets, money, and products. If you or your company are not utilizing bills of lading as a tool in your business you may be exposing your company to unnecessary losses and risk.
A bill of lading is just one of several important documents that should be utilized in a purchasing and shipping system. It goes along with an offer, purchase order, and receipt to name a few. In today’s article, we are going to discuss what a bill of lading is. You can also read what information is contained in a bill of lading, and how it can help protect your business.
What Is a Bill of Lading?
A bill of lading, often abbreviated to BOL or B/L, is a legal document that details goods that are to be shipped. The document involves both the shipper and the carrier of the goods. It should detail:
- What is being shipped;
- The amount of the merchendise;
- The destination of the goods;
- When and where liability for the goods transfers from the shipper to the carrier and finally to the receiver of the goods.
Similar to a passenger plane ticket, a bill of lading will usually include the following information:
- Name and address of the company or person shipping the goods (the shipper or seller), and of the company transporting the goods (the carrier);
- Final destination of the goods, including the name and address of the buyer of the goods (the buyer);
- Name of the person who works for the buyer that will be signing for the goods. It can also be the person inspecting the goods upon arrival (the arrival agent);
- Whether the shipper of the goods or the buyer pays the freight. This will often usually correspond to who has the liability for the goods in transit as well;
- Specific handling instructions for the goods while being shipped. For instance, if the good shave to needs storage at a certain temperature or a type of packaging;
- What method of delivery is most suitable, i.e. by train, plain, truck, etc.
What Does a Bill of Lading Do?
A bill of lading protects your company and your company’s assets against goods that are lost or damaged in the shipping process. It assigns risk and liability to the three parties (the shipper, the carrier, and the receiver). So they do not end up all pointing the finger at each other. It helps avoid unnecessary delay, litigation, and legal costs. It also avoids surprises.
Let’s say a museum is shipping a one of a kind painting. Then, they are going to want to make sure the panting does not have exposure to direct sunlight or moisture during the shipping process. Similarly, a frozen food manufacturer is going to want to ensure that its products are kept at an ideal temperature. This is to make sure the food is not spoiled by the time it reaches its final destination.
A bill of lading also serves to show the timing and place of transfer of ownership of the goods. Ownership transfers when the goods leave the shipper’s place of business or when they arrive at the buyer’s place of business. This part can make a big difference in the liability and risk of a sale or purchase of goods. So companies should take it into consideration at the time of the sale. Whether the goods have an insurance during transit and by who they should address in the bill of lading.
Who Needs a Bill of Lading the Most?
Companies that ship a lot of their goods should utilize bills of lading. Bills of lading are especially important when the goods being shipped are expensive, fragile, one of a kind, or have to go long distances.
The higher the cost of the goods, the further they have to travel. Consequently, the more hands they have to pass through to get to the buyer. This makes bills of lading that much more important.
How Much Does a Bill of Lading Cost? 4 Facts & Tips
- Bills of lading should fit into into your standard operating procedures. So it should be part of someone’s salary job to make sure bills of lading receive a proper execution for all deliveries. This especially includes areas where you feel the risk of shipping dates the necessity for a bill of lading.
- If you use the same carrier for all your shipments you should be able to have a standard bill of lading set up. This way, little time or manpower will be necessary for each individual shipment.
- Many carriers will provide standard bills of lading for their customers to use. This is a cost-effective way to get in the habit of using bills of lading. But the document will probably protect the carrier more than the shipper or seller. Therefore, you should customize it for your needs.
- You can hire an attorney to prepare a standard bill of lading for usage by your company. But do not be surprised when a carrier or buyer wants to negotiate the terms of the bill of lading. That is why it is important to have someone of staff that is comfortable with bills of lading and it is part of their job to review, and prepare. They should properly negotiate every such document your company needs.
As you have seen, a bill of lading is just one of several important legal documents in the purchasing and shipping system that you should utilize to protect your business assets and products. Someone in your office should learn and become competent at bills of lading if you regularly ship your goods.
How does your business utilize bills of lading? What advice would you give a new company about bills of lading? How they should integrate them into their business practices? Please, visit our Facebook page and let us know your best tip or piece of advice about bills of lading.
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