Speaking of accounting and terms that relate to the export and import business; Even if you have a bookkeeper or accountant who will take good care of your books, there are a few things and terms to know. Before I start talking about terms, I want to tell you my story. When my husband and I first started this business, we did not have any experience in this field. We didn’t even have experience running any kind of business, so all financial and non-financial terms were new to us. When we first went to speak to a customs broker, I thought he was speaking a different language to us. Even the word freight sounded very strange to me, “Why wouldn’t you call that shipping?” I thought. So, I know your pain when it comes to business lingo.
FOB destination
FOB destination – the ownership of the merchandise passes from a seller to a buyer at the destination. That means that the seller is responsible for the loss or damage of the goods until the shipment is delivered to the buyer. For example, you bought a car in Germany with FOB destination terms. In this case, if something happens to a car while it is being shipped, you have NO responsibility for it and you will not have to pay for any damage or loss of the car. You don’t even have to buy the car when it arrives, if it is not in acceptable condition. All expenses are borne by the seller.
Freight out:
Outbound freight (Outbound transportation) – the terms for recording transportation costs or shipping costs, when the seller is responsible for delivery (FOB destination). (The seller will record the transportation cost as outbound freight, outbound freight, or delivery expense.)
FOB shipping point:
FOB shipping point (FOB origin) – the title of the goods passes from a seller to a buyer on the seller’s shipping document. That meant a buyer had to pay for delivery. Basically, if you bought a car with FOB shipping point or FOB origin terms, you are responsible for the delivery and the damage or loss of the car. If the car arrives in poor condition due to an accident that occurred WHILE the car was shipped, you cannot request a refund.
- Prepaid destination freight – the seller pays and takes all the transport costs and. (Almost the same as FOB destination)
- Destination freight prepaid and returned – The seller pays the transport costs, but returns them on the buyer’s invoice. (For example, when you buy something from Amazon.com, they usually include the shipping price on the receipt. That means they pay for shipping, but they charge you for it.)
- Charge to collect at destination – The buyer pays and is responsible for all transport costs. (However, the buyer pays all expenses, just as the car reaches the destination.)
- Destination freight collected and allowed – The buyer pays the transport costs, but the seller assumes the costs on the invoice. (For example, you bought a car that cost you $ 5,000 and you paid $ 1000 for shipping. Total: $ 6000. When the car arrives and you receive the invoice from the company that sold you the car, you see that they charge you only $ 4000, because they made an allowance of $ 1000 for shipping).
Loaded:
Loading in (Transport in) – the terms for recording transportation costs or shipping costs when the buyer is responsible for delivery (FOB shipping point, FOB origin) (The buyer will record this cost as Freight-In or Transportation-In).