The Incoterms, or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce. These terms are used widely in International commercial transactions and procurement processes.
It is important for every company to have the Incoterms at the forefront of their practices. And to help you do that effectively, here are a few of the basics.
First off, you should understand that there are 11 rules in the most recent update, and these rules are divided into two sections. The first is for any mode of transport, and the second is for transportation through water.
Understanding which set of rules you must abide will help you to ship internationally legally and without too much hassle. These rules determine the way in which proceedings must occur, including:
· Where the goods must be sold or exchanged
· Who pays for the transportation of the goods
· What risks will be assumed, and by whom
For more information on the individual rules Incoterm, you can check out the International Chamber of Commerce website. Understanding these rules can help small businesses to be more successful and to decrease their risks in international trades.
Once you have the rules in check, it is important to understand what the Incoterms can do for you. Overall, these terms have all been created to ensure that international business ventures go over smoothly.
Because so many barriers (language barriers among others) are in place in international trade, a common set of laws, like the Incoterms, are essential to fair trade. That means that the main benefit of the Incoterms for your business is decreased risk in your international transactions.
These rules can decrease confusion and make international trades much simpler for small business.
We SRMF will help clients understand the Incoterms and to make their international trades successfully. Contact us today and see how we can help you understand the Incoterms and be more successful.
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