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Incoterms

Incoterms, sometimes referred to as shipping terms, are a set of rules which have been structured by the International Chamber of Commerce.

The latest set of rules are known as the Incoterms 2010. There are 11 Incoterms in total, and all are designed to clearly set out the obligations of the buyer and seller during the transit of physical goods. This is achieved within each term by clearly defining the point of delivery from seller to buyer, which is effectively the point at which risk passes from seller to buyer.
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By clearly defining the Incoterm between seller and buyer, and buyer and customer, all parties concerned can clearly define:

  • by what mode of transport the goods will be sent
  • who is responsible for arranging freight
  • who is responsible for paying the cost of freight
  • who is responsible for insurance of the goods (whether deemed by the incoterm or not)
  • who deals with the customs clearance on export and import
  • who is responsible for payment of duties and taxes
  • who is in control of the documentation to get the goods through customs
  • how the goods need to be packaged and mark up for export and import
  • how the security arrangements will work throughout the export/ import process.

Understanding the Incoterm is vital in any trade transaction as it will help clarify if the buyer is in control of the goods at the point the seller is expecting the buyer to make payment. If the buyer is not in control of the goods when the seller is expecting payment from the buyer, then using one of the payment instruments Aldermore offer will eliminate this from happening.

It is also extremely important that the Incoterm is clearly expressed through all the documents within the transaction, see Contracts and Payments

You can read more about each Incoterm here on the International Chambers of Commerce (ICC) website. To talk about your import plans just contact one of our expert team today.

The information on this page is correct as of 21 April 2015

This page is for information only. You should seek professional advice if you have any questions relating to the information on this page.

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