FOB
Shipping Point, Freight Colleced
Freight Collect is a freight term used in accounting. Under freight
collect, the Buyer is the one who makes the actual payment to the shipping
company or any other logistics company. Normally if the contract between the
buyer and seller is FOB Shipping Point, payment of freight is freight
collect. This is also the assumption when problem in accounting is silent.
Under FOB Shipping Point, Freight Collect, Buyer shoulders the freight charges (FOB Shipping Point) and at the same time, Buyer is the one who makes the actual payment to the shipping company (Freight Collect).
However, it may also be possible to have a contract with shipping company or logistics company under FOB Shipping Point, Freight Prepaid. (See also FOB Shipping Point, Freight Prepaid)
Under FOB Shipping Point, Freight Collect, Buyer shoulders the freight charges (FOB Shipping Point) and at the same time, Buyer is the one who makes the actual payment to the shipping company (Freight Collect).
However, it may also be possible to have a contract with shipping company or logistics company under FOB Shipping Point, Freight Prepaid. (See also FOB Shipping Point, Freight Prepaid)
Definition:
The term FOB shipping point is a contraction
of the term "Free on Board Shipping Point." The term means that the
buyer takes delivery of goods being shipped to it by a supplier once the goods
leave the supplier's shipping dock. Since the buyer takes ownership at the
point of departure from the supplier's shipping dock, the supplier should
record a sale at that point.
"Freight Collect" is a
term used in the freight moving business that means that the freight will be
paid by the person receiving the freight. The alternative would be
"Freight Prepaid." If you order something, and you pay the shipper
for shipping, then they will pay the charges the trucking company charges to
move the item. This amount could be more or less than what you give the shipper.
If you tell the shipper that you will pay the cost when it arrives, then they
will ship it "freight collect," meaning the trucking company will
need a check payable to them when they deliver your item. If you have an
account with a certain trucking company, then you can request that the shipper
use that company so that you maybe billed. It will still be "Freight
Collect," but will be automatically billed to you by the company that you
use.
