As part of your import or export sales negotiations, you will be required to include international commercial terms (Incoterms) in your sales contract. Incoterms are a series of internationally recognised sales-related trade terms. These terms clearly define the costs, risks, and obligations of both parties (the buyer and the seller). Using Incoterms might seem daunting at first, but you will soon realise how much easier they make the international buying and selling process.
For each stage of the transportation, Incoterms clearly stipulate:
Which party must take responsibility for transport costs (including taxes, insurance, and duties);
Which party is responsible for loading and unloading the goods; and
Before finalising your sales contract to send to a buyer, or signing a seller’s contract, make sure you review the quotation thoroughly. A thorough quotation should include various Incoterm options. Figure 1 below illustrates how using Incoterms on a formal quotation can provide clarity to both the buyer and seller. Each row of the quotation illustrates a different Incoterm option, along with example text to use on your invoice. The example includes colour-coded explanations of key sections of the quotation.
Note: It is not necessary to include every incoterm on your quotation. Your choice depends on the costs you are willing to bear and the amount of risk you are willing to take as well as the other party’s requirements.
Need assistance with Incoterms, or other import- and export-related matters? Contact our friendly consultants on 0861 0 TRADE (87233), or get in touch via our website.