Freight accrual

A freight accrual records the cost of transport that has been delivered but not yet invoiced, so the month's accounts carry the expense in the period it happened. IAS 37 defines accruals as liabilities for goods or services received but not yet paid, invoiced or formally agreed. When the carrier's invoice arrives, it replaces the estimate.

Why freight gets accrued

Carriers invoice days or weeks after delivery, and some only monthly. Under IAS 37 — reproduced in Australia's AASB 137 — accruals are liabilities to pay for goods or services received but not yet paid, invoiced or formally agreed, while trade payables have been invoiced. US tax rules reach the same point from the other side: for services, economic performance occurs as the services are provided. The US Department of Housing and Urban Development's own policy books accruals at each quarter end for goods and services received but not invoiced.

Worked example: a month-end accrual

The estimate comes from what is already known about each load: the lane, the agreed rate and the proof of delivery. Tracking the variance month by month shows how good the estimate is — and a variance that keeps landing on the same carrier can mean charges nobody agreed.

The mistake people make

Accruing only what was quoted. Detention, liftgates and fuel surcharge changes arrive on the invoice, not on the rate sheet, so an accrual built from linehaul alone understates the month every time. Accrue the accessorials the proof of delivery already shows, and the variance shrinks. Accrue per load rather than per carrier, so each estimate can be matched to its invoice line when the bill arrives.