Incoterms are international trade terms which define the different responsibilities of the buyer and the seller. Their main objective is to establish criteria defined on the distribution of costs and the transmission of risks between the buyer and the seller side in international sales contract.
The main advantage consists of having simplified by 11 standardized denominations a cluster of conditions that have to be met by both contracting parties. Thanks to this harmonization or standardization, both the buying and selling party know exactly what to expect.
• The delivery of the goods, either directly or indirectly.
• The transmission of risk.
• The distribution of costs between the parties.
As can be seen, the management of Incoterms is critical to establish guidelines for business operations, so the knowledge of every detail is necessary to avoid problems and make operations convenient as your company wishes them to be.