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OUTSTANDING FREIGHT CLAIM AND WITHOLDING INVOICES

Discussion in 'Help us add discussions that really matter' started by ManU, Oct 21, 2016.

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  1. loaders

    loaders Site Supporter

    The worst type of claim to get settled, is the one whose value falls below the carriers deductible. The approx. $1500 ones where the carrier refuses to investigate, and his insurer won't respond because the carrier hasn't reported it.
    It wouldn't surprise me if this was the type of situation that results in a shipper offsetting an invoice.
     
  2. lowmiler88

    lowmiler88 Site Supporter

    We have a great claims ratio when it is on our trucks (.0002 %) but when you ship 2 to 3 trailer loads a day of LTL not on your trucks it's impossible not to have 2 or 3 a week. I would suggest that if someone is charging tax on a claim they might be keeping that money for themselves not everyone follows the rules.
     
  3. htcollections

    htcollections Suspended Member

    CRA has the habit at times to ensure carriers charge a RESUPPLY. best off to pay it so the nice auditors later in time don't assess it. Always verify HST numbers on line and print the verification. You are responsible for verification and if you pay someone without a proper hst number, CRA can deduct that from your ITCs.
     
  4. Rob

    Rob Site Supporter

    3 in 19 years at that is enough. and One on the brokerage end
     
  5. MikeJr

    MikeJr Moderator Staff Member

    Thought so. 2015 we managed (through working with the right carriers) a 1 in 486 claims ratio, so yes we have had to explain the tax to claimants. Of course we're in intermediary, do not pick sides and endeavour as always to ensure that no party is acting fraudulently or in bad faith.

    Thanks lowmiler!

    Keep well,
    Mike
     
  6. lowmiler88

    lowmiler88 Site Supporter

    It is actually illegal to put tax on a damage claim, trust we do enough of them to know.
     
  7. MikeJr

    MikeJr Moderator Staff Member

    Taxes on claims - Somehow I understood that the claimant could not include tax in a damage claim. Do they not just claim them as input tax credits in order to recoup the expense? Where's my friend at Marsh when you need him? Patrick, hook us up!

    You guessed it, I'm not in accounting either - nor am I considering a move in that direction.

    Keep well,
    Mike
     
    chica123 likes this.
  8. Michael Ludwig

    Michael Ludwig Well-Known Member

    Same here, but if you get one ugly one and you know you are in the right, you learn the rules in a hurry, and never forget them ... LOL
     
  9. theman

    theman Well-Known Member

    That's a good question. Good thing is that my claims ratio on things I have handled over the years (outside of the time I did produce) is around 1 in 1000, so even though I've been in it for a long time, I can't say I've been involved in 'mountains' of claims. Thank goodness.
     
  10. Michael Ludwig

    Michael Ludwig Well-Known Member

    Right, I got that. Now, suppose that load was from point to point in Ontario. Part of that offset should have been for the transportation cost, and the other part should have been for the sale of the goods to which HST is due on both. Regardless of whether the shingles were written off or not, you bought them. You owe HST on the sale, and the shipper needs to remit that HST. So my question is, how was the tax liability accounted for?
    Remember, in this country you can get away with almost anything except not paying your taxes. The taxman is a cold-hearted SOB ... LOL
     
  11. theman

    theman Well-Known Member

    If you signed a contract, I'd assume you read it. So if you say you're going to accept a customer doing this, then you have to do it ... regardless of whether it's legal or not. But when I've come across it in contracts, we've tried to negotiate it out and if we couldn't we would just have to make a judgement call on whether we think the customer is acting in good faith or not.

    Contracts are for 'what ifs' where man-to-man can't come up with an arrangement ... day to day it is not something that is referred to.
     
  12. jonny-chicken

    jonny-chicken Site Supporter

    I'm also not an accountant... which might be why I don't understand your question... haahaa...

    Our customer took the exact value of the load from a cheque they sent us for services... Then I got the exact same amount from my insurance company... It was a wash... like a short-term interest free loan provided by me... haahaaa....

    And if my customer is committing tax fraud, then dammit, I'm raising my rates! haahaa..
     
  13. Michael Ludwig

    Michael Ludwig Well-Known Member

    Just curious, because I'm not an accountant, but if you contra someone's account, how do you deal with the taxes?
    Maybe your customer is committing tax fraud ... LOL
     
  14. Michael Ludwig

    Michael Ludwig Well-Known Member

    Quite often you find when a customer has to go thru the claim process, they discover the fault was actually theirs anyways. TBH, it's pretty hard to screw up a load of anything these days, unless you had an accident or your driver was a complete moron.
    When we sign contracts, we strike out the paragraph(s) pertaining to off-setting. These types of contracts are usually the domain of load brokers who actually have no stake in the claim process to begin with. Regardless, if they don't like it, then we don't work for them.
     
  15. jonny-chicken

    jonny-chicken Site Supporter

    We had a claim last year that involved a collision and an entire load of shingles was destroyed. Our customer took the full value of the shingles off their next payment to us... It was pretty painful for us, but our insurance company was very understanding and expedited the claim so we were not on the hook for too long...

    The customer had an off-setting clause in their contract, so it was their right... It was pretty frustrating, but all worked out in the end.
     
  16. theman

    theman Well-Known Member

    It's never right to contra invoices to settle a claim. A freight claim is to be treated separately from actual services rendered. If there is resolution to a claim and an arrangement is made to pay a net balance on a cheque run of outstanding invoices from the freight claim, it's one thing ... but the whole idea of doing a contra on invoice to settle a claim is a one-sided claim resolution.

    This used to be very common back in the day where I dealt with people at the OFTB and there was a claim ... it actually led to me souring on hauling produce for anyone except a chain store. The only other time I have come across this in my fairly long career was when I dealt with a company where the owner was in charge of the freight. Guess what ... we sued him.

    The other times we had a claim we went through a process, got paid for the freight, and at the time of resolution of the claim we sent the customer a cheque for it.
     
    chica123 likes this.
  17. economy

    economy Member

    Michael Ludwig - "contract cannot supersede the law". The regulation which create the Uniform Conditions of Carriage deem to be a part of every contract for the transportation. The language of statute is clear; it is not "shall be a part of every contract". Therefore if there is a written contract signed by both parties and provisions pertaining damaged cargo is different from Uniform Condition, the court will most likely decide to rely on the contractual provision.

    This is why I asked ManU: if there is a contract in place. If no contract, he/her should rely on Uniform Conditions of Carriage.
     
    Bulldog5221 likes this.
  18. Michael Ludwig

    Michael Ludwig Well-Known Member

    Yep, that's it in a nutshell.
     
  19. loaders

    loaders Site Supporter

    I think where some people get confused, and both Michael and I have addressed this issue in previous threads, is the difference between an Intent to Claim, and the Statement of Claim. I am sure we all agree, no one likes to receive a notice of freight damage, and some carriers will immediately get their backs up, especially if they feel there is no negligence on their part. There seem to be some out there that believe they are under no obligation to investigate, or notify their insurers, unless they have a copy of the paid freight bill in their hands. A carrier is obligated to respond to a freight claim, investigate as required and if necessary, contact their insurer regardless if the freight bill has been paid or not. It is only when the claim is finally being settled (why it is called the Statement of Claim), does the issue of the paid freight bill become relevant. If a shipper is off setting outstanding invoices due to an unpaid or denied freight claim, the carrier certainly has the right to pursue that matter in Small Claims Court.
     
    whatiship and lowmiler88 like this.
  20. Michael Ludwig

    Michael Ludwig Well-Known Member

    A couple things ....
    1) The statement of claim must include proof of the paid freight charges. It's not an option.
    2) Contracts cannot supersede law unless they provide for more than the law specifies. i.e. If the law says you have 60 days to file, a contract cannot limit that to 30 days. However, a contract can lengthen it to 90 days. The same holds true for off-setting "rights". It is illegal to offset money owed from money earned unless you have the person or entities express written permission for each and every transaction. Keep in mind the law leans towards the contractee, not the contractor.
     

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