Third-Party Billing
Also known as: Bill to Third Party, 3rd Party Billing, Freight Bill to Third Party
Definition
Third-party billing is a shipping payment arrangement where the freight charges are billed to an account holder who is neither the shipper nor the recipient. It’s commonly used in drop shipping, customer-paid freight, and corporate logistics programs.
How Third-Party Billing Works
- Shipper creates label using third party’s account number
- Carrier picks up and delivers the package
- Third party receives invoice and pays freight charges
- Shipper and receiver don’t pay directly for shipping
Common Third-Party Billing Scenarios
| Scenario | Who Pays | Why |
|---|---|---|
| Customer’s carrier account | Customer | They have better rates |
| Parent company | Corporate HQ | Centralized logistics costs |
| Drop shipping | Brand/retailer | Supplier ships, brand pays |
| Trade shows | Event organizer | Exhibitors ship, organizer pays |
| Warranty returns | Manufacturer | Customer returns on mfg account |
Setting Up Third-Party Billing
Requirements typically include:
- Third party’s carrier account number
- Third party’s billing zip/postal code
- Authorization from account holder
- Valid carrier agreement with third party
Carrier Requirements
UPS
- Third-party account number
- Third-party postal code
- Authorization on file
FedEx
- Third-party account number
- Account must be in good standing
- Some services may be restricted
USPS
- Permit imprint or metered postage
- Commercial Plus Pricing accounts
Benefits
- Leverages best-negotiated rates
- Simplifies vendor logistics
- Centralizes freight spending
- Enables drop shipping models
Considerations
- Must have account holder’s permission
- Account holder sees shipper/receiver details
- Some restrictions on international shipments
- Requires accurate account information
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