Incoterm

Overview

Incoterm – Business Explanation

Incoterm is a setup document in Dafater used to define and standardize international trade terms that clarify responsibilities between buyers and sellers. These terms clearly state who is responsible for transportation, insurance, customs duties, and risk at each stage of a shipment. Using Incoterm helps avoid misunderstandings and disputes in domestic and international trade.

What Incoterm Is Used for in Business Operations

Incoterm is used to: - Clearly define delivery terms in sales and purchase transactions
- Establish who bears costs, risks, and obligations during shipping
- Ensure consistent communication with customers, suppliers, freight forwarders, and insurers
- Support compliant and transparent international trade practices

By selecting the correct Incoterm, businesses ensure that both parties understand their responsibilities before goods are shipped.

Prerequisites or Setup Requirements

Before using Incoterm effectively, businesses should: - Agree internally on which international trade terms are applicable to their operations
- Align Incoterm usage with company policies, contracts, and legal requirements
- Train sales, purchasing, and logistics teams on the meaning of each Incoterm

Incoterm should be set up early, as it becomes a reference point for many commercial transactions.

Typical Workflow and Business Process Fit

Setup: Incoterm records are created and approved as part of initial system configuration.
Transaction Use: During sales or purchase agreements, the relevant Incoterm is selected.
Operational Execution: Logistics, shipping, and finance teams use the Incoterm to manage freight, insurance, customs clearance, and risk transfer.
Documentation & Communication: The selected Incoterm appears in commercial documents and communications with trading partners.

This ensures consistent understanding from negotiation through delivery.

Key Business Scenarios Where Incoterm Is Essential

International sales contracts where shipping responsibility must be clearly defined
Import and export operations involving customs, freight, and insurance
Supplier negotiations to determine cost and risk ownership
Logistics planning to avoid disputes over delivery points and liability

Without Incoterm, businesses risk confusion, delays, and unexpected costs.

Important Considerations for Users

Always choose the Incoterm that accurately reflects the negotiated agreement
Ensure both parties understand the selected Incoterm before confirming orders
Review Incoterm usage periodically to stay aligned with changing trade practices
Remember that Incoterm defines responsibilities, not payment terms or product ownership

Used correctly, Incoterm provides clarity, reduces risk, and supports smooth global trade operations within Dafater.

Basic Information

Module: Setup
Document Type: Other

Fields

Field Name	Label	Type	Required	Options	Description
code	Code	Data	✓	-	Standard Incoterm code used in Dafater trade and logistics documents
title	Title	Data	✓	-	Official Incoterm title defining international trade responsibility framework
description	Description	Long Text		-	Detailed explanation of buyer and seller obligations under this Incoterm

Permissions

Role	Read	Write	Create	Delete
Accounts User	✓
Purchase User	✓
Stock Manager	✓	✓	✓	✓
Sales Manager	✓	✓	✓	✓
Accounts Manager	✓	✓	✓	✓
Sales User	✓
Stock User	✓
Purchase Manager	✓	✓	✓	✓

DocType	Relationship	Module
Delivery Note	Linked from	Stock
Purchase Invoice	Linked from	Accounts
Purchase Order	Linked from	Buying
Purchase Receipt	Linked from	Stock
Quotation	Linked from	Selling
Request for Quotation	Linked from	Buying
Sales Invoice	Linked from	Accounts
Sales Order	Linked from	Selling
Shipment	Linked from	Stock
Supplier Quotation	Linked from	Buying