Delivered isn't closed: the financial work left on a freight file

Suppose an import container is delivered to the consignee's warehouse on a Tuesday. Operations marks the file complete, and finance invoices the customer for the freight, clearance and trucking agreed in the quotation. Three weeks later the shipping line's detention invoice arrives: the empty went back to the depot six days after its free time ended. Nobody had told the customer that charge might follow, the invoice they received looked final, and they now dispute the second one.

Nothing in that file went wrong operationally. The cargo arrived and the paperwork was in order. The problem is that the file was treated as finished when only the transport was. For a freight forwarder, delivery is the point where the financial work on a file becomes visible, not the point where it ends.

This article is for finance managers, operations heads and owners at forwarding companies who want a clearer rule for when a file is actually closed, and a routine for the files sitting between "delivered" and "closed".

#What is still open when the cargo arrives

On a typical file that combines freight, customs clearance and inland delivery, four kinds of work are usually still open on the day of delivery.

• Supplier costs that haven't arrived. The ocean freight invoice may be in, but terminal storage, detention on the empty container, inspection fees, a trucker's waiting time or an agent's handling charge often reach you days or weeks later. Some of them, such as detention, keep growing until the container is returned.
• Charges you haven't billed. Some charges can't be billed until the supplier cost behind them is known. Others were simply missed because they came up during the shipment and never reached whoever prepares the invoice.
• The customer's review. A customer who disagrees with a charge usually says so after receiving the invoice. Until that is settled, the amount you expect to collect is not certain.
• Collection. The payment terms you agreed with the customer usually run from the invoice date, so an invoice issued late pushes the cash back by the same number of days.

Each of these sits with a different person. Operations knows whether the empty has been returned. Accounts payable holds the supplier invoices. Sales agreed the terms that decide what can be recharged. Finance issues the invoice and follows the payment. A file closes cleanly only when all four strands are finished, and nobody in that chain sees all of them by default.

#Know which costs you are still waiting for

The late supplier invoice is a problem mainly when nobody expected it. The way to make it expected is to compare, for each file, the costs you planned with the costs you have received.

The plan comes from the work itself. When the shipment was booked, its services were known: freight, clearance, trucking, perhaps storage. Each service brings a set of supplier costs, usually from rates you already hold. When the cargo is delivered, compare that list with the supplier invoices on the file. A planned cost with no matching invoice is either still coming or was never incurred, and someone should say which.

Detention and storage need their own check, because the final amount depends on dates that only operations knows: when the container was discharged, collected and returned. If the empty has not been returned, the file cannot be closed, however complete it looks, because the cost is still running.

This matters for the margin as well as for billing. If finance books the revenue in October and the detention cost arrives in November, October shows a better margin than the file earned and November shows a worse one. Recording the expected cost when the work is done, often called an accrual, keeps each month's figures honest. That only works if someone knows, file by file, which costs are still to come.

#Decide what you can pass on to the customer

A late supplier cost raises a second question: can it be recharged? The answer is in the terms you agreed, not in the supplier invoice.

Look at what the quotation said. If it stated the free time, said that detention and storage beyond it are for the customer's account, and named the shipping line's tariff as the basis, recharging is routine. If it quoted an all-in door delivery price with no exclusions, the cost may well stay with you. Most files sit somewhere in between, and the decision should be made by someone who can read the quotation and knows what was agreed afterwards by email or on the phone.

We looked at how these terms behave when ports are congested in our article on Khor Fakkan and Fujairah delays. The same logic applies to any file after delivery: decide who bears the charge before it appears on an invoice.

#Invoice now, or wait for the last cost?

Finance teams tend to fall into one of two habits, and both have a cost.

If you wait until every supplier invoice is in, the first invoice to the customer goes out late. The payment terms start later, the customer has had time to forget the shipment, and a file whose agreed charges could have been billed sits at zero.

If you invoice the agreed charges at delivery and bill late charges separately, cash comes in sooner, but the customer receives a second invoice they may not expect. That second invoice is where disputes start.

A workable middle path is to invoice the agreed charges promptly and tell the customer, at the same time, which charges may still follow and why. For example: the empty container is still with the consignee, and detention beyond the free time will be billed at the line's tariff once it is returned. A later debit note for that charge is then a confirmation of something already announced, not a surprise.

Corrections need the same discipline. Once an invoice has been issued, change it with a credit note rather than by editing the original. The customer's records and yours then match, and the history of the file explains itself.

If the file involves more than one currency, check the margin again at this point. A supplier cost in US dollars and a customer invoice in local currency, issued on different days, can produce a different margin from the one in the quotation even when every amount is correct. Recording the exchange rate used for each cost and each invoice is what lets you explain the difference later.

#Agree what "closed" means

Many forwarders have no written definition of a closed file, so each department uses its own. Operations calls a file closed at delivery, finance when the invoice is out, and management assumes both.

A definition everyone can check might read:

Payment is often tracked separately from closure, because a customer may pay several files at once and some files are paid weeks after everything else is settled. What matters is that the file shows which condition is still missing, and that the answer doesn't depend on asking around.

In Bolisa, a file reaches Ready to Close only when operations, cost review, customer review and invoicing are complete, and the file lists what is blocking it. More on that on our finance page.

#A weekly look at delivered, unclosed files

Whatever system you use, one meeting a week can stop open files from piling up. Before the meeting, list every file delivered more than a set number of days ago, for example ten, that is not yet closed. Then, for each file, record:

• How many days since delivery.
• Which condition is still open: an empty not returned, a supplier invoice missing, a charge not yet billed, a dispute.
• Who owns the next step, and by when.

Sort the list by age. The oldest files usually carry the problems that need a decision, such as a cost nobody has agreed to bear or a customer who has stopped replying. Files that keep reappearing for the same reason point to something to fix upstream, most often in how quotations describe free time and exclusions.

Run it for a month and the list itself becomes useful: it shows how long your files take to close, where they wait, and which customers or services account for most of the delay. That is also the question to ask any freight forwarding software you consider, which we cover in our guide to choosing one.