Freight and Hire Invoicing: Raise Accurate Invoices on Time
Set up a freight and hire invoicing routine that issues correct invoices on trigger dates and stops cash sitting uncollected after fixing.
This is for finance heads, voyage accountants and operations managers at shipowners and operators. Freight and hire are the largest receivables you have, yet invoices often go out late because nobody turned the recap's payment terms into dates. Each late or incorrect invoice pushes cash back and invites disputes about deductions. This post shows how to convert payment terms into triggers, build invoices from the recap, and handle deductions and short payments in a way that protects your position.
A voyage fixture says freight is payable within a set number of banking days after signing and releasing bills of lading. The bills are released on a Friday, but the operator learns about it on Tuesday, and the invoice reaches the charterer a week after it could have. On a time charter, the next hire period starts and nobody has issued the advance hire invoice.
When payment arrives, it is short. The charterer has deducted estimated off-hire, bunker value on board and some owner's expenses. Finance cannot tell which deductions are allowed under the charter party, so the balance sits unresolved on the ledger for months and gets argued over at final account stage.
A small dry bulk owner in Kochi invoiced hire whenever someone remembered, and short payments piled up unexplained. The finance head asked the operator to log delivery and redelivery dates in the voyage system on the day they happened, and set up invoice triggers from each recap. Hire invoices began to go out ahead of each period. For short payments, the voyage accountant matched each deduction to a CP clause and queried those without support. Within a few cycles, the backlog of unexplained balances shrank, charterers queried fewer invoices because the figures matched the recap, and final hire statements closed with far less argument than before.
When is freight usually payable under a voyage charter?
It depends on the charter party. Common terms link payment to signing or releasing bills of lading, or to completion of discharge, sometimes with a split between initial and balance freight. Always read the actual clause in your recap and CP.
What is a hire statement?
A hire statement is the running account of a time charter: hire earned, off-hire deductions, bunkers on delivery and redelivery, owner's expenses, commissions and payments received. It shows the balance owed by either party.
Can charterers deduct from hire?
Some deductions are allowed by the charter party, such as agreed off-hire or owner's expenses paid on the owner's behalf. Others may not be. Check the specific clauses and take legal advice where a deduction is disputed.
How do we handle GST on freight invoices in India?
GST treatment of ocean freight and charter hire depends on the nature of the service, the parties and the place of supply, and rules have changed over time. Check the current position with your tax adviser before finalising invoice formats.
Want this fixed in your business?
Send the workflow. You get a scope and a fixed price within two working days — or a straight answer that it isn't a fit.