Terms of Sale CIF (cost, insurance, freight) C&F (cost and freight)

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Presentation transcript:

Terms of Sale CIF (cost, insurance, freight) C&F (cost and freight) FAS (free alongside) FOB (free on board) EX (named port of origin)

Getting Paid: Foreign Commercial Payments Letter of credit Afford the greatest degree of protection for the seller Can be revocable or irrevocable Not a guarantee of payment to the seller Bills of exchange Also known as dollar drafts The seller assumes all risk until the actual dollars are received Sight draft Arrival draft Date draft

Getting Paid: Foreign Commercial Payments (continued) Cash in advance Places unpopular burdens on the customer Open accounts Not generally made in foreign trade Leaves sellers at a disadvantage Forfaiting The seller makes a one-time arrangement with a financial institution to take over responsibility for collecting the account receivable

Export Documents Export documents Consular invoice of certificate of origin Bill of lading Commercial invoice Insurance policy or certificate Licenses Other documents

Packing and Marking Export packaging must consider: Protection against rough handling, climate, pilferage Effect of gross weight on import fees All countries regulate the marking of imported goods and containers All markings must conform exactly to the data on the export documents

Customs-Privileged Facilities Foreign trade zones (FTZs) Drawback Offshore assembly (Maquiladoras) Originated in Mexico in the early 1970’s NAFTA Customs-privileged facilities are areas where goods can be imported for storage and/or processing with tariffs and quota limits postponed until the products leave the designated areas.

Summary The mechanics of exporting require little room for interpretation or improvisation. The very nature of the regulations and restrictions surrounding importing and exporting can lead to frequent and rapid change. The manufacturer must keep abreast of all foreign and domestic changes in requirements and regulations. Foreign-freight-forwarders can handle many details for a nominal fee. Transportation mode affects total product cost. A physical distribution system determines everything from plant location to final customer delivery in terms of the most efficient use of capital investment, resources, production, inventory, packaging and transportation. The continuous innovations in information technology, the Internet, and software programs can minimize much of the burden associated with global marketing.