Bill of lading field
Prepaid vs collect vs third party on a bill of lading
This box decides who gets the freight invoice. Prepaid means the shipper pays. Collect means the consignee pays. Third party means neither of them does — a broker or the buyer's logistics arm is billed instead, and then the Bill To block is mandatory rather than optional.
Why it matters
It is the only box on the document that decides where the money goes. Everything else describes the freight; this one describes the deal.
The mistake that costs money
Ticking third party and leaving Bill To empty. The carrier cannot invoice a company it cannot name, so it defaults to billing the shipper — you — and unwinding that after the fact is a credit-note conversation, not a correction.
Worth knowing
- Prepaid is the default on most outbound shipments where the seller is quoting delivered pricing.
- Collect is normal when the buyer has their own carrier contract and better rates.
- Third party needs a full billing name and address, not just a company name.
- This is separate from the sale's Incoterms. Freight terms say who pays the carrier; Incoterms say who owns the risk.