Despatch handover: payment or freight credit?

Key takeaways

• Separate agreement on the despatch amount from agreement on payment mechanics.
• Identify the creditor, debtor and account concerned.
• Do not infer a right to deduct from freight merely because a despatch balance exists.
• Prevent the same amount from being paid separately and credited again.
• Give finance and operations one reconciled settlement instruction with the appropriate authority.

Establish the actual payment arrangement

BIMCO's published CEMENTVOY comparison material includes form-specific provisions addressing demurrage and despatch payment. It does not supply a universal settlement process. Check the current text and actual agreement before determining who pays, who receives and whether any credit or deduction is permitted.

The calculation team may finish its work by obtaining agreement on the time saved and rate. The settlement team still needs to know how that agreed result is to be discharged. A spreadsheet showing a credit is not necessarily an instruction agreed by the parties.

Identify the relevant legal entities and account references. Similar company names, trading desks or group relationships should not be treated as interchangeable. If the proposed credit relates to a different agreement or party, obtain the necessary review rather than treating the account connection as obvious.

The handover should describe the arrangement in plain language: the agreed amount, the obligation it settles and the authorised method. Any unresolved point should remain explicit.

Distinguish calculation approval from deduction authority

Approval of a despatch calculation answers a substantive account question within its scope. It may not authorise withholding that amount from a freight payment. The contractual and legal basis for any deduction requires separate review.

The operations desk should therefore avoid sending finance an instruction such as “deduct despatch” without the supporting authority. Provide the actual agreement or reviewed basis and identify the account against which the amount is to be applied.

Conversely, finance should not be asked to decide the underlying entitlement through a routine posting choice. Its role is to implement authorised treatment and reconcile the resulting records. Contractual uncertainty belongs with the principal and adviser before the posting is treated as final.

If a proposed credit is still under negotiation, label it as proposed. An internal net forecast can help cash planning, but it should not become the external payment instruction merely because it appears in the latest account summary.

Keep the settlement path singular and visible

Once the parties choose the settlement method, make sure the same amount is not being processed through another route. A separate despatch payment request and an instruction to reduce freight can coexist in different departments unless someone reconciles them.

The handover should identify the chosen route and the status of any earlier instruction. If a previously requested transfer is cancelled or superseded, obtain confirmation through the authorised process. Do not assume that an email announcing the new method has stopped an instruction already in progress.

A credit note also needs context. It may document an agreed adjustment, but the team should identify whether it has actually been applied and to which account. Issuing the document and completing the settlement are distinct events.

Keep the evidence of the final application. A future reviewer should be able to see that the despatch obligation was settled once, through the agreed route, rather than infer closure from a collection of offsetting entries.

Use a settlement handover checklist

This checklist should be completed with the actual arrangement, not treated as authority in itself. The responsible people should understand both the commercial agreement and the posting that implements it.

Where a question remains open, identify the consequence. A missing account reference may need administrative clarification. A disputed right to deduct requires a different decision. Do not group both under a vague “payment pending” label.

Fictional case: a credit follows an already requested payment

In a fictional fixture, the parties agree a despatch amount and the charterer's account team requests separate payment. Later, the commercial desks discuss applying the amount against a freight balance instead. The incoming operations desk sees the proposed net statement and tells finance to use it.

The earlier payment request remains active. If both processes proceed, the same despatch amount could be settled twice. The problem arises even though the underlying calculation is accurate and the parties do not dispute the time saved.

The reviewer identifies the competing instructions and confirms which settlement route is actually authorised. Finance checks the status of the separate payment before applying any credit. The desks then reconcile the account and preserve the evidence of the chosen treatment.

A better handover would have stated that the credit method was still proposed, identified the existing payment request and assigned responsibility for resolving the change. The fictional case concerns process and account reconciliation; it does not determine any right to set off or deduct under a real charter.

Transfer unresolved issues without creating a net fiction

An internal cash forecast may show the expected effect of despatch on the voyage's overall economics. That forecast should remain distinct from an agreed net payment obligation. Combining amounts for planning does not establish that the parties can settle them by offset.

If the despatch amount itself remains disputed, the handover should preserve that status as well. The team should not reduce a confirmed payment obligation using an unreviewed expected credit merely to produce the forecast cash position.

Where a commercial compromise includes several accounts, obtain a clear statement of the components and settlement scope. The final payment instruction should correspond to that arrangement. Avoid leaving individual invoices open in a way that prompts duplicate collection after the package is settled.

The incoming desk needs a concise explanation of what can be implemented now and what remains a decision. This lets finance act on confirmed instructions while the authorised principal resolves the substantive issues separately.

Confirm closure through reconciliation

After the payment or credit is completed, reconcile the despatch record with the relevant freight or settlement account. Identify any residual difference and explain its cause rather than closing it through an unsupported adjustment.

The closure record should show the agreed amount, chosen method, confirmed application and remaining exceptions. It should also identify any superseded instruction so later staff do not restart an abandoned payment route.

This final check is not merely administrative. It confirms that the commercial bargain was implemented as intended and that the same credit is not still being treated as available elsewhere. A clean calculation is valuable only when the settlement process preserves its meaning.

Common mistakes

The main mistake is treating agreement on despatch as automatic authority to deduct from freight. Another is allowing separate-payment and credit instructions to remain active at the same time. Confirm the actual arrangement and reconcile the processing routes.

Do not confuse a cash forecast with a net obligation or a credit note with completed application. Avoid using finance postings to decide a contractual dispute. Finally, preserve the closure evidence so the same despatch amount is not pursued or credited again.

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