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Terms of Sale

See Also:
Net 30 Credit Terms
Net Sales
Credit Sales
Daily Sales Outstanding (DSO)
Commercial Risk

Terms of Sale Definition

Terms of sale definition is the terms which a buyer and seller agree upon. They are as important in exporting as they are with domestic sales. Terms of sale serve the purpose of creating uniform expectations between buyers and sellers. In this way, terms of sale help each party to avoid disagreements which cancel the sale or cause legal liability.

Terms of Sale Explanation

Terms of sale, explained also as the cost, amount, and distribution terms regarding a sale, are essential to a fair deal. They explain, in detail, the exact agreement for a sale: cost, amount, delivery, payment method, payment timing, trade credit, credit terms, and more. They are also essential because they allow each party in a transaction to leave satisfied.

Terms of sale become more important when importing or exporting goods. Here, the terms of sale (incoterms) explain how and when shipping occurs, who pays international duties and taxes, and other factors established by international chamber of commerce regulations. This allows discrepancies to be avoided and properly processed, preventing lawsuits and even international incidents.

Terms of Sale Example

Sophia imports and exports goods to China. She has a hard job; making sure deals are succinct, products are delivered, governments are appeased, and customers are satisfied. She deals closely with terms of sale; 2 10 net 30, delivery paid for by the seller, and she covers the duties.

On a recent shipment of consumer products she is reviewing the terms of sale agreement. This tells her all of the important information regarding the purchase. She makes sure to read the fine print.

In this document she finds a typo which makes the terms unclear. Rather than accepting this she contacts the seller. Sophia knows better than to let this problem go without fixing. Sophia finds, through this, that she and the delivering company have different expectations. Luckily she found this now, so she begins renegotiation. She is able to recover a better deal than she was originally presented with. All of this because she checked the terms of sale international shipping document.

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terms of sale definition

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terms of sale definition

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Delivered Duty Unpaid

See Also:
Delivered Duty Paid (DDP)
Freight on Board (FOB)
Delivery Order
Ex Works (EXW)
Cost of Goods Sold (COGS)

Delivered Duty Unpaid

Delivered Duty Unpaid or DDU is the contract assuming that a vendor or seller will assume transportation costs associated with an international or overseas sale. Furthermore, the buyer will assume all of the import/export fees or duty fees.

Delivered Duties Unpaid (DDU) Meaning

Delivered Duties Unpaid means that a seller will assume liabilities and costs associated with delivering goods to a country. However, the buyer assumes the duty fees or costs to bring the product into the country. Unless specified in the DDU contract the buyer will also assume all liability once the product has entered the desired country. This is something that is often negotiated between companies. DDU talks are often decided in association with the riskiness of that particular country.

For example, if a U.S. firm is selling to a company that is centered in a high risk or war plagued country, then there is little chance the U.S. firm would want to assume the responsibility of delivery within the country. Negotiations for delivered duties unpaid are not that different from the negotiations that take place domestically. DDU is essentially the same type of negotiation that occurs for Ex Works and Freight on Board.

delivered duty unpaid

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Delivered Duty Paid (DDP)

See Also:
Freight on Board (FOB)
Ex Works (EXW)
Delivery Order
Delivered Duty Unpaid (DDU)
Cost of Goods Sold (COGS)

Delivered Duty Paid (DDP) Definition

Delivered Duty Paid or DDP means that a seller or vendor has assumed all of the liability as well as the costs associated with transportation internationally.

Delivered Duty Paid (DDP) Meaning

DPP means that a vendor has agreed to a contract with an overseas or international partner to assume all of the liability and transportation costs. In addition, the concept of delivered duties paid is almost the exact same as freight on board or Ex Works. When a DDP agreement has been met, the buyer will not assume any transportation costs or liability until the goods have been delivered to the country. Delivery within the country is the buyer or customer’s responsibility unless otherwise specified in the delivered duty paid contract. Furthermore, such terms are often worked out in a delivered duties paid contract. Finally, most of the transportation costs associated with a DDP transaction are import/export tariffs along with normal operational cost of a truck or container ship.

delivered duty paid

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