International Trade & Incoterms

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Questions and Answers

What is the first document issued in an international trade transaction?

Bill of Lading (B/L)

Invoice

Purchase Order (P.O.) (correct)

Packing List

A proforma invoice becomes a binding contract upon acceptance by the buyer.

True

What document serves as evidence of the contract of carriage in international shipping?

Bill of Lading (B/L)

The document that lists the contents of each package being shipped is called a ______.

packing list Signup and view all the answers

Which of the following is NOT a part of the pre-purchase order phase?

Packing List Signup and view all the answers

Match the following documents with their functions:

Invoice = Details goods/services provided and amount due Purchase Order = Formal request to purchase goods or services Packing List = Lists contents of each package being shipped Bill of Lading = Acknowledges receipt of goods by the carrier Signup and view all the answers

Enterprise resource planning (ERP) systems help in managing export sales through integrated business functions.

True Signup and view all the answers

What is the purpose of a lead dashboard in the lead management process?

To track and analyze lead progress Signup and view all the answers

What is the purpose of sales forecasts?

To plan production, inventory, and logistics Signup and view all the answers

Incoterms are mandatory and must be included in every sales contract.

False Signup and view all the answers

What document is issued by the buyer to request pricing from suppliers?

Request for quotation (RFQ) Signup and view all the answers

The ________ acknowledges receipt of goods during transport and serves as a contract of carriage.

Bill of lading (B/L) Signup and view all the answers

Match the following documents with their descriptions:

Proforma invoice = Preliminary invoice detailing goods to be provided Purchase order (P.O.) = Formal order placed by the buyer Invoice = Detailed statement for goods or services provided Packing list = List of contents of each package Signup and view all the answers

Which of the following is NOT a key document in the documentary chain?

Credit Note Signup and view all the answers

Incoterms manage responsibilities and costs related to the delivery of goods.

True Signup and view all the answers

What is the current version of Incoterms?

Incoterms 2020 Signup and view all the answers

The ________ is a standardized customs declaration form used in the European Union.

Single Administrative Document (SAD) Signup and view all the answers

What characteristic is associated with Incoterms created by the ICC?

They reflect changes in international trade practices. Signup and view all the answers

Study Notes

International Trade Documents & Incoterms

International Trade Transaction Sequence: A typical transaction moves from a purchase order (P.O.) to a bill of lading (B/L), with various supporting documents in between.

Pre-Purchase Order Steps

Lead Generation & Management: Generate potential leads for export sales, qualify them, and nurture leads to become customers using lead dashboards for tracking.
Offer/Quotation: Submit a formal offer to potential buyers including a cover letter and a proforma invoice; adjust tone to buyer's culture.
Proforma Invoice: A preliminary invoice to detail goods/services and payment terms; becomes legally binding after buyer acceptance.

Role of ERP Systems

Streamlined Management: ERP systems integrate various business functions like sales order processing, inventory management, financial management, and logistics management.
Sales Forecasting: ERP systems use historical sales data, market trends, and sales pipelines to generate accurate sales forecasts, crucial for production, inventory, and logistics planning.

Documentary Chain

Key Documents: Request for quotation (RFQ), offer, proforma invoice, purchase order, purchase order acknowledgment, invoice, dispatching advice, packing list, bill of lading (B/L), air waybill (AWB), consignment note, Single Administrative Document (SAD), and Trade of Goods Declaration. These documents ensure comprehensive exchange between buyer and seller for smooth transactions.
Supporting Documents: Certificates of origin, insurance, and other documentation depending on specific needs.

Incoterms (ICC 2020)

Standardized Trade Terms: Incoterms, published by the International Chamber of Commerce (ICC), define responsibilities and costs for delivery of goods between buyers and sellers.
Legal Structure: Incorporated into sales contracts, Incoterms detail delivery terms, but aren't mandatory. Parties can agree to different terms.
Cost Impact: Choice of Incoterm affects pricing by determining who carries costs associated with transport, insurance, and other costs.
Risk & Cost Allocation: Incoterms clearly allocate risks and costs between buyer and seller.
Regular Updates: Incoterms are regularly updated by the ICC to reflect changes in international trade practices. The current version is Incoterms 2020.

Resources

Various websites offer resources for understanding Incoterms (e.g., incotermsexplained.com, searates.com, iccwbo.org, etc.).

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Description

Explore the essential documents and processes involved in international trade transactions, including purchase orders, quotations, and proforma invoices. Understand the role of ERP systems in managing these processes effectively and streamlining operations.