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The Basics of Incoterms
Why are Incoterms Important ?
Why are Incoterms Important ?
Why are Incoterms Important ?
[object Object],[object Object],[object Object],[object Object],Purpose of Incoterms
Payment Terms PAYMENT TERMS TIME OF PAYMENT GOODS/DOCUMENT OF TITLE AVAILBLE TO BUYER RISK TO EXPORTER RISK TO IMPORTER CASH IN ADVANCE Before shipment After payment None.  Payment received prior to shipment. High.  Pays in advance of shipment. Relies on exporter to ship as agreed. DOCUMENTARY LETTER OF CREDIT -Sight Draft Following shipment and presentation of documents. After payment Low.  However, documents presented must comply with L/C terms. Low.  Documents presented evidence of shipment; however, goods shipped may not be as described in documents. DOCUMENTARY  LETTER OF CREDIT - Time Draft On maturity date of draft.  Draft may be discounted for early payment. After “acceptance” of time draft by bank. Low.  However, documents presented must comply with L/C terms. Low.  Documents presented evidence shipment; however, goods shipped may not be as described in documents. COLLECTION Documents Against Payment – Sight Draft On presentation of draft to buyer, provided buyer agrees to pay. After payment. High.  No guarantee that buyer will pay for goods.  If unpaid, exporter must dispose of goods. Low.  However, banks do not review documents and goods shipped may not be as described in documents. COLLECTION Documents Against Payment – Time Draft On collection at maturity of time draft. Before payment, after “acceptance” of time draft by buyer. High.  No guarantee that buyer will pay upon maturity of draft and buyer has possession of goods. None; although buyer had accepted draft and agreed to pay upon maturity of draft. OPEN ACCOUNT As agreed. Possibly before payment; it depends on terms granted. Very high.  Completely relies on buyer to pay as agreed. None.
Two Key Points of Incoterms ,[object Object],[object Object],[object Object]
Incoterms 2000
How Incoterms Are Organized   ,[object Object],[object Object],[object Object],[object Object],[object Object]
EXW – Ex Works (…named place)   The The ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
FCA – Free Carrier (…named place) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
FAS  – Free Alongside Ship  (…named port of shipment) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
FOB  – Free On Board  (…named port of shipment) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
CFR – Cost and Freight   (…named port of destination)   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
CIF – Cost, Insurance and Freight  (…named port of destination) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
CIF – Cost, Insurance and Freight  (…named port of destination ) ,[object Object],[object Object],[object Object]
CPT – Carriage Paid To…. ( na med place of destination ) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
CIP – Carriage and Insurance Paid To  (…named place of destination )   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
CIP – Carriage and Insurance Paid To  (…named place of destination )   ,[object Object],[object Object],[object Object]
DAF – Delivered At Frontier (…named place)   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
DES – Delivered Ex Ship (…named port of destination)   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
DEQ – Delivered Ex Quay (…named port of destination)   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
DDU – Delivered Duty Unpaid (…named place of destination)   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
DDP – Delivered Duty Paid (…named place of destination)   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Incoterms 2000
Thank You!

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Basics of Incoterms Explained

  • 1. The Basics of Incoterms
  • 2. Why are Incoterms Important ?
  • 3. Why are Incoterms Important ?
  • 4. Why are Incoterms Important ?
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  • 6. Payment Terms PAYMENT TERMS TIME OF PAYMENT GOODS/DOCUMENT OF TITLE AVAILBLE TO BUYER RISK TO EXPORTER RISK TO IMPORTER CASH IN ADVANCE Before shipment After payment None. Payment received prior to shipment. High. Pays in advance of shipment. Relies on exporter to ship as agreed. DOCUMENTARY LETTER OF CREDIT -Sight Draft Following shipment and presentation of documents. After payment Low. However, documents presented must comply with L/C terms. Low. Documents presented evidence of shipment; however, goods shipped may not be as described in documents. DOCUMENTARY LETTER OF CREDIT - Time Draft On maturity date of draft. Draft may be discounted for early payment. After “acceptance” of time draft by bank. Low. However, documents presented must comply with L/C terms. Low. Documents presented evidence shipment; however, goods shipped may not be as described in documents. COLLECTION Documents Against Payment – Sight Draft On presentation of draft to buyer, provided buyer agrees to pay. After payment. High. No guarantee that buyer will pay for goods. If unpaid, exporter must dispose of goods. Low. However, banks do not review documents and goods shipped may not be as described in documents. COLLECTION Documents Against Payment – Time Draft On collection at maturity of time draft. Before payment, after “acceptance” of time draft by buyer. High. No guarantee that buyer will pay upon maturity of draft and buyer has possession of goods. None; although buyer had accepted draft and agreed to pay upon maturity of draft. OPEN ACCOUNT As agreed. Possibly before payment; it depends on terms granted. Very high. Completely relies on buyer to pay as agreed. None.
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