Freight billed on destination terms
A buyer deducts shipping costs from their payment even though the contract specifies FOB Destination — meaning the seller is obligated to deliver freight-free above a certain order threshold. The buyer's AP system sees a freight line on the carrier invoice and automatically nets it against the seller's remittance, ignoring the contractual obligation.
Under FOB Destination terms, the seller pays for shipping and assumes risk until the goods arrive at the buyer's dock. Many contracts include a dollar threshold — for example, 'Freight prepaid on orders exceeding $10,000.' When the buyer receives the goods, their AP department sometimes debits a 'freight adjustment' against the seller's payment, claiming the buyer arranged collect shipping. The problem: the contract says the seller already paid for shipping, and the order exceeded the threshold. The freight debit is phantom — it has no contractual basis.
Section 4.2 of the MVA typically reads: 'All purchase orders with a net invoice value exceeding $10,000 shall ship FOB Destination, freight prepaid by Seller. Carrier selection is at Seller's discretion. Orders under $10,000 ship FOB Shipping Point, freight collect.' The test is binary: order value above $10,000 = seller pays freight. The buyer cannot debit freight on a qualifying order regardless of which carrier was used or what the carrier invoice says.
Axiom matches the order invoice total against the freight threshold in §4.2. If the order exceeds $10,000 and the buyer deducted freight, the system pulls the signed carrier Bill of Lading (BOL) showing clean dock receipt (all pallets received, no shortage). The dispute letter cites §4.2, states the order total, attaches the BOL as evidence that delivery was completed under seller-paid terms, and requests full reversal of the phantom freight debit.