The end of the transition period is quickly approaching. It is now more important than ever to make sure that you are ready for all the changes ahead. We want to help you avoid slipping up and make sure you are aware of all the tricky intricacies that could cause problems for you if you don’t get them right.
The first banana skin we are approaching is IncoTerms. Preventing a slip up here is crucial for both importers and exporters.
What Are International Commercial Terms (IncoTerms)?
International commercial terms (IncoTerms) play a vital role in international business. They are terms that both the buyers and sellers of goods agree upon prior to conducting international business transactions.
This includes -
Who is responsible for transport costs
Which party is expected to complete import/export declarations and pay the duties
Where the transfer of ownership will take place
IncoTerms can change in different circumstances. One reason for an alteration could be the type of vehicle being used to transport the goods between the buyer and the seller.
DDP (Delivered Duty Paid) and EXW (Ex Works)
DDP and EXW are IncoTerms that can be used for all modes of transport (sea, rail, road and air). If you are planning to sell under DDP or buy under EXW, it is crucial that you know who can do import/export declarations within the third country.
Currently, if you are submitting a customs declaration you will need to be based within that customs territory.
This brings us to our first banana peel… This rule causes complications when utilising DDP and EXW, as both of these IncoTerms are reliant upon submission of a customs declaration within a third country. If you do not already have a plan in place for this instance, you need to start reviewing the situation. Leaving it until later will make it much more difficult to overcome and could potentially lead to severe delays.
As we are now only weeks away from the end of the transition period, it is crucial that you are prepared for all eventualities and have a plan in place prior to 1st January 2021. For traders who are reliant upon utilising DDP or EXW this means that the terms of these agreements will need to be reviewed in order to maintain the smooth running of business.
We want to make sure that you are ready for January. With so many changes occurring it is vital that you know what your business needs to do to avoid delays, fines and any other complications. Stay updated on Twitter, LinkedIn, Facebook and our blog!