When buying in international trade, it’s crucial to know which trade terms can benefit you the most. Understanding the differences between the terms of trade will make you reduce cost and risk. And it will also make your E-Commerce buying experience more accessible. We have experienced using each of the trade terms ivr view for the web adidas zx flux amazon nike toddler girl shoes bepon plavky bratislava fön mit batterie chemo muts heren Netherlands idee biglietti regalo compleanno creme anti demangeaison apres rasage daft punk no mask inview totes nike air jordan 1 nike air max 270 mens blundstone nike air jordan 1 детски блузи за момче s dyado mrazn different international sales contracts during our decade of experience. May it be EXW, CIF, FOB, or you name it, we know exactly how it’s done.
WHAT ARE TERMS OF TRADE
Trade terms are the terms of a transaction between a supplier and a buyer. You can use it in both domestic and international trade. But, it’s usually used more often in the latter. In this trade agreement, buyers and sellers negotiate and decide who shoulders specific risks, costs, and responsibilities associated with the goods shipped. Each term of the trade sales contract divides these responsibilities between the two parties differently. In some terms of trade, the seller bears most of these responsibilities. While in some trade terms, the buyer is responsible for most expenses and documentation of their imported goods. It’s important to know which trade terms are suitable for your given market. This way, you’ll have a perfect balance between reducing expenses and having comfort while buying from suppliers.
CIF: CIF stands for Cost, Insurance, and Freight. This means that the seller delivers his part of the contract when products pass the ship’s rail on a port. The seller is supposed to pay the essential freight and costs to bring the products to the decided port. The risk of damage or loss to the product, including additional costs, if occurred due to certain events after the delivery time, will be transferred to the buyer. In those cases, they try to buy good insurance to manage the losses.
Exwork(EXW):
One of the simplest and most basic shipment arrangements places the minimum responsibility on the seller with greater responsibility on the buyer. In an EX-Works transaction, goods are basically made available for pickup at the shipper/seller’s factory or warehouse and “delivery” is accomplished when the merchandise is released to the consignee’s freight forwarder. The buyer is responsible for making arrangements with their forwarder for insurance, export clearance and handling all other paperwork. It means that the seller is responsible for the accessibility and availability of the products at his/her factory or warehouse only. The buyer is responsible for picking goods from there.
FOB: One of the most commonly used and misused terms, FOB means that the shipper/seller uses his freight forwarder to move the merchandise to the port or designated point of origin. Though frequently used to describe inland movement of cargo, FOB specifically refers to ocean or inland waterway transportation of goods. “Delivery” is accomplished when the shipper/seller releases the goods to the buyer’s forwarder. The buyer’s responsibility for insurance and transportation begins at the same moment.
payment options used at Asasoft
Letters of credit
A letter of credit, or LOC, is issued from one bank to another bank (usually in another country) to guarantee that payments will be made to a party (e.g., a person or a company) on time, for the correct amount, and possibly other specified conditions. Once you have a letter of credit from your buyer, you’re sure you’ll get paid, as long as all the documentation required by the LOC is presented to the bank. Note: If you’re dealing with a country where the banking system isn’t stable, the letter of credit must be confirmed by a Canadian bank.
SBLC
A standby letter of credit (SBLC) refers to a legal instrument issued by a bank on behalf of its client, providing a guarantee of its commitment to pay the seller if its client (the buyer) defaults on the agreement. An SBLC is frequently used in international and domestic transactions where the parties to a contract do not know each other. A standby letter of credit serves as a safety net by assuring the seller that the bank will make payment for the goods or services delivered if the buyer fails to make the payment on time.
Telegraph Transfer
A telegraphic transfer is an electronic method of transferring funds, used primarily for overseas wire transactions. Telegraphic transfers are used most often with Clearing House Automated Payment System transfers. Typically, a telegraphic transfer is complete within two to four business days, depending on the origin and destination of the transfer, as well as any currency-exchange requirements. Telegraphic transfers are also known as telex transfers (TT), or more generically as wire transfers or electronic funds transfers.
Cash payment
A cash payment is bills or coins paid by the recipient of goods or services to the provider. Cash receipts identify the money to be received after the sale of goods and services. On the other hand, cash disbursement is the amount paid out for purchasing items to be used by the company.
