What Is a Bill of Lading

A bill of lading (BL or BoL) is a legal document issued by a carrier to a shipper that details the type, quantity and destination of the goods being carried. A bill of lading also serves as a shipment receipt when the carrier delivers the goods at a predetermined destination. This document must accompany the shipped products, no matter聽the form of聽transportation, and聽must be signed by an authorized representative from the carrier, shipper and receiver.锘

As an example, a聽logistics company intends to transport, via heavy truck, gasoline from a plant in Texas to a gas station in Arizona. A plant聽representative and the driver sign the bill of lading after loading the gas on the truck. Once the carrier delivers the fuel to the gas station in Arizona,聽the truck driver requests that the station clerk also sign the document.

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Bill of Lading

Key Takeaways

  • A bill of lading is a legal document issued by a carrier to a shipper that details the type, quantity, and destination of the goods being carried.
  • A bill of lading is a document of title, a receipt for shipped goods, and a contract between a carrier and shipper.聽
  • This document must accompany the shipped goods and聽must be signed by an authorized representative from the carrier, shipper, and receiver.
  • If managed and reviewed properly, a bill of lading can help prevent asset theft.

Bill of Lading Explained

The bill of lading is a legally binding document that provides the carrier and shipper with all of the necessary details to accurately process a shipment. It has three main functions. First, it is a document of title to the goods described in the bill of lading. Secondly, it is a receipt for the shipped products. Finally, the bill of lading represents the agreed terms and conditions for the transportation of the goods.

Segregation of Duties

Every business聽needs to have聽internal controls聽in place聽to prevent theft. One key component聽of聽internal control聽is segregation of duties, which prevents one employee from having too much control within a聽business.

No two internal controls systems are the same. However, most follow a standard set of core philosophies that have become standard management practice. The implemention of internal controls can help streamline operations and prevent fraud.

Real World Example

A bill of lading is one of several key documents that must be properly managed and reviewed to聽prevent asset theft. Assume, for example,聽XYZ Fine Dining receives shipments of fresh meat and fish five times a week. The restaurant manager聽determines聽the聽type and amount of meat and fish the restaurant needs to order. He then聽fills out a purchase order, and聽XYZ鈥檚 owner reviews and initials each PO before it is emailed to the food vendor. The vendor gathers the聽meat and fish, and both he and a representative from the overnight carrier sign a bill of lading.

Next, the carrier delivers the food to the restaurant, and the manager compares the information on the bill of lading to what he requested on the PO. If the聽information matches, the聽PO and聽the bill of lading are sent to the聽owner, who聽reviews the documents and writes a check payable to the food vendor.

In this example, the owner does not issue a check to the聽vendor without reviewing the聽purchase order (PO) and聽the bill of lading. This step ensures XYZ only pays for聽what聽it聽ordered and what it聽received. If the two documents do not match when the restaurant manager compares them,聽the manager聽will ask the vendor聽about the exception. A third employee聽reconciles the聽bank statement and聽makes company聽deposits. All of these steps must be in place to聽prevent theft.