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What Are Incoterms?

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Incoterms

Today we will talk about Incoterms, what are they and some examples. It may be that you meet a client who wants to apply an Incoterm, the EXW, for example, in the sale that you have to make. So to help you in these cases, at Selfemployed Spain, we clarify all your doubts.

What are Incoterms?

Incoterms (International Commercial Terms) are rules about the delivery conditions of the goods. They are used to divide the costs of commercial transactions, usually international, defining the responsibilities between the buyer and the seller. Although the other aspects, such as price, payment method, etc., must be expressly agreed.

Typically, as we have said, Incoterms apply in international sales. However, you should know that you can also apply them in sales between companies in the same country. Therefore, if a client proposes you to make a sale under these agreements, it is totally viable.

Some of the sections that Incoterms regulate are:

– Conditions of delivery of the merchandise.

– What risks are covered by the seller and the buyer, as well as what is insured.

– Distribution of expenses.

– Customs formalities.

– Transfer of responsibility for the operation.

– Transfer of possession of the merchandise.

– Transport.

Also, you should note that as of January 1, 2020, the INCOTERMS® 2020 Rules came into force. ICC Publication No. 723 of the INCOTERMS® 2020 Rules.

The EXW Incoterm (Ex Works)

We will explain the content of one of them, the EXW, as it is one of the most common.

The EXW (Ex Works) Incoterm implies that the seller puts the goods already prepared in their own facilities and at the buyer’s disposal, who assumes all costs and risks from that moment on. So if you carry out operations as a supplier following this Incoterm, it will be very advantageous for you because you will only have to make your product available to the client so that he can pick it up.

Now, suppose you have not reached any agreement to submit to an Incoterm or agree on the place of delivery of the merchandise. In that case, we remind you that it has to be delivered to the seller’s facilities anyway. Still, if you agree to the conditions of the EXW, you will make clear from the beginning the obligations of the parties, and thus you can save yourself problems.

For more details about the EXW, we recommend this article where they explain it in detail.

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