Prepaid
Use prepaid when the agreed carrier-billing path is the shipper. It is a billing designation; do not assume the word proves payment has already been made.
Freight terms
Prepaid vs. collect vs. third-party billing on a bill of lading
Choose the party the carrier should bill, then make sure the booking, bill-to information, and BOL all tell the same story. Freight terms are an operational instruction—not a substitute for the underlying sales or carrier agreement.
The short answer
On a domestic freight BOL, prepaid normally tells the carrier to bill the shipper, collect tells the carrier to bill the consignee, and third-party billing identifies a different bill-to party. The carrier’s tariff, contract, and booking instructions govern the actual arrangement, so use the label only after those details are aligned.
The common mistake is treating the checkbox as a promise that a charge is settled or that it decides ownership, loss, insurance, or every party’s liability. It does none of those jobs by itself. Its immediate job is to keep pickup paperwork and the carrier’s billing workflow from starting with conflicting directions.
Do not use a BOL checkbox to rewrite the deal
Freight payment terms can interact with carrier contracts, tariffs, purchase terms, and credit arrangements. Confirm the intended payer and account with the carrier or broker before tendering; this guide is not legal or billing advice.
Mark the term that matches the arranged freight billing
Collect
Use collect when the carrier has agreed to bill the consignee or receiver. Check that the receiver’s billing contact, account requirements, and delivery process are confirmed before pickup.
Third party
Use third party only when a party other than the shipper or consignee is the approved billing contact. Put the complete bill-to name and address on the document when the carrier’s process requires it.
Separate it from COD
Freight terms identify the planned payer for transportation charges. A cash-on-delivery instruction addresses collection from the receiver for the goods or another specified amount; it is not another name for collect freight.
A quick billing-direction check
| Mark | Carrier billing direction | Verify before pickup |
|---|---|---|
| Prepaid | Bill the shipper under the agreed carrier process. | Booking, shipper account, and any carrier-specific paperwork. |
| Collect | Bill the consignee under the agreed carrier process. | Receiver approval, account information, and delivery collection process. |
| Third party | Bill the named party that is neither origin nor destination. | Complete bill-to details and carrier approval for third-party billing. |
Before you mark freight terms
- 1Read the booking, rate confirmation, or carrier instruction—not an old shipment—as the source for the payer.
- 2Confirm whether the carrier needs an account number, a third-party address, or a reference on the BOL.
- 3Keep the physical pickup and delivery addresses separate from a third-party bill-to address.
- 4Check that the freight term on the BOL agrees with the carrier-facing booking record.
- 5Ask the carrier or broker how an exception, refusal, or rebill is handled before the truck arrives.
Freight terms questions
Does prepaid mean the freight has already been paid?
Not necessarily. On a BOL, prepaid is commonly a direction about whom the carrier should bill. Confirm the invoice status and payment terms in the carrier’s billing process.
Can the bill-to party be different from the consignee?
Yes, when the carrier has agreed to third-party billing. The delivery recipient and billing contact have different jobs, so do not replace the consignee’s actual delivery information with a billing address.
Is collect freight the same as cash on delivery?
No. Collect freight concerns the carrier’s transportation charge. COD is a distinct collection instruction that should be used only when the carrier accepts it and the amount, remit-to party, and fee handling are clear.
Related guides
Sources & scope
Updated August 22, 2026. Scope: U.S. domestic general freight. Billing instructions vary by carrier, broker, tariff, contract, customer routing guide, and shipment type. Confirm the carrier-approved process before tendering.
- U.S. DOT freight payment guidance — prepaid, collect, and third-party freight-billing definitions
- 49 CFR §373.103 — covered motor-carrier freight/expense-bill information
Set the billing direction alongside the shipment facts
DockBOL keeps freight terms, the optional third-party bill-to party, and the pickup document in one live view. Confirm the carrier’s instruction, then export a clear PDF.
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