What are incoterms? #
Incoterms are a set of standardized international trade terms that define the responsibilities and obligations of buyers and sellers in international trade transactions. The term “Incoterms” stands for International Commercial Terms and they are published by the International Chamber of Commerce (ICC).
By using Incoterms in international trade transactions, buyers and sellers can avoid misunderstandings and disputes that may arise due to differences in legal systems and trade practices across different countries. The use of Incoterms provides a standardized framework for international trade that facilitates smoother transactions and reduces the risk of costly legal disputes.
What does each incoterm abbreviation stand for? #
Here is a list of Incoterms with their abbreviations and a brief description of each:
EXW – Ex Works: The seller makes the goods available at their premises and the buyer is responsible for all transportation and shipping costs.
FCA – Free Carrier: The seller delivers the goods to a carrier specified by the buyer, and the buyer assumes all risks and costs from that point forward.
CPT – Carriage Paid To: The seller is responsible for the transportation of the goods to a specified destination and must pay for the cost of transportation.
CIP – Carriage and Insurance Paid To: Similar to CPT, but the seller is also required to purchase insurance for the goods during transportation.
DAP – Delivered at Place: The seller is responsible for delivering the goods to a specified destination, but the buyer is responsible for unloading the goods and any additional costs.
DPU – Delivered at Place Unloaded: Similar to DAP, but the seller is responsible for unloading the goods at the specified destination.
DDP – Delivered Duty Paid: The seller is responsible for delivering the goods to a specified destination and must pay for all costs associated with transportation, including customs duties.
FAS – Free Alongside Ship: The seller is responsible for delivering the goods to a port, and the buyer is responsible for loading the goods onto the ship.
FOB – Free on Board: Similar to FAS, but the seller is responsible for loading the goods onto the ship.
CFR – Cost and Freight: The seller is responsible for the transportation of the goods to a port, and must pay for the cost of transportation and insurance.
CIF – Cost, Insurance and Freight: Similar to CFR, but the seller is also required to purchase insurance for the goods during transportation.
How to setup incoterms in Artintech ERP? #
Incoterms are mainly used when issuing a purchase order or sales order. In both cases, you need to define the incoterms from settings menu. For each incoterm that is commonly used by your company, add the abbreviation and a quick description for future reference.
When the list is completed, the terms will automatically appear across the ERP where ever they are necessary in a form.
