Terms of exports are important when you sell a product to a customer outside the USA. This is where INCOTERMS comes into play. (Internationally Recognized Commercial Terms). They define some key responsibilities of buyers and sellers in international business. Issued by the international chamber of commerce, INCOTERMS 2020 is the latest version available.
So how do you understand INCOTERMS? Note that there are no full definitions or legal advice. For any assistance, get help from a lawyer or corporation which gives aid in such cases.
That is where Clearit USA gives you as its client a hand of help with issues concerning exportation and importation of goods. We offer services of this kind of challenges and we have a team of consultants is available with wise legal and business advice. Do not be stranded when we are here for you
Each location is expressed with 3 letters acronym. For instance, “XYZ” with a place of delivery. INCOTERMS are tools for specifying who will pay and manage various elements of the shipping process including loading and unloading (transportation), terminal charges, cargo insurance, export clearance (export license and security documentation) and export formalities (search as packing and pre-shipments inspections), customs clearance (import documentation and import license), import duties and taxes, cargo unloading and delivery to the agreed place.
INCOTERMS also define when the risk of loss or damage of goods transferred from seller to buyer. There are other risks to consider in an export transaction including liability for export compliance obligations and the cost of custom delay. The choice of one of the 11 INCOTERMS depends upon whether the shipment uses any mode of transport or only sea and/or inland waterway transport. So, the first & INCOTERMS are for any mode of transport.
These risks can include macroeconomic risks like, risk of inflammations, political risks which include civil unrest or economic sanctions or business-specific risk like the potential for decreased market demand in a foreign country and changes to customers’ creditworthiness.
Other risks are:
- Legal risks
- Quality risks
- Transportation and logistics risk
- Language and cultural risk
Things to learn when doing export risk management:
- Knowing the foreign market
- Transportation of goods.
- Learn more about the importers.
- Not to export to earthquake areas since a natural calamity or a disaster may destroy your goods and that is not good for business.
- Plan and research on the suitable foreign market with the least risks and are manageable.