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Step 8: Preparing your export plan

You are here:Step 8: Preparing your export plan >Preparing an export marketing strategy for your firm > Export distribution > The influence of payment terms and Incoterms on distribution



The influence of payment terms and Incoterms on distribution


What do we mean by payment terms and Incoterms?

Payment terms are the payment provisions (or details), that have typically been negotiated between the exporter and the foreign buyer, regarding the settlement of a transaction. These terms will normally indicate (or at least imply) the method of payment, when payment must take place, what credit is being allowed and for how long, and when delivery is expected. Click here to learn more about payment terms. These payment provisions will clearly impact on distribution. For example, by setting the delivery date of the goods in an Letter of Credit will place certain time constraints on the distribution of the goods to reach the destination by the time and date specified. Selling on a consignment basis, for example, will also mean that you need to account for perhaps having to return the goods not sold to South Africa. What is more, you will need to pay for the distribution of the goods in advance and this may encourage you to choose the cheapest transportation alternative in order to keep costs down.

In exporting, payment terms commonly incorporate one or other agreed-upon Incoterm (standing for international commercial term), such as EXW, C&F, CIF or DDP. Click here to read more about Incoterms. The purpose of these Incoterms is to spell out clearly where the responisbilities of the exporter and import lie in respect of distribution and payment. For example, with EXW (ExWorks), the exporter is responsible to deliver the goods at the factory door in South Africa, while for CFR, the seller is responsible for the goods until such time as they cross the ship's rails in South Africa (even though the seller - the exporter - pays for the freight). What is more, CFR is intend for ship transportation only. Clearly, depending on which of these two (or any other) Incoterms forms the basis of the payment terms, the distribution responsibility of the exporter will vary considerably. Thus payment terms and Incoterms directly affects the distribution function.


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Step 8: more information

Step 8: Preparing your export plan
      Synopsis of research already done
      Revisiting an export SWOT analysis of the firm
      Setting the export objectives of the firm
      Preparing an export marketing strategy for your firm
                  The export product
                  The export price
                  Export promotion
                  Export distribution
                        .Market entry channels
                        .In-market distribution decisions
                        .Physical distribution
                        .The Whole Channel concept
      Preparing an export budget for your firm
      Outlining an implementation schedule for your export activities
      Preparing and presenting your export plan
      Obtaining approval for your export plan


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More information on Step 8
Learning to export...
The export process in 21 easy steps
Step 1: Considering exporting
Step 2:Current business viability
Step 3:Export readiness
Step 4:Broad mission statement and initial budget
Step 5:Confirming management's commitment to exports
Step 6: Undertaking an initial SWOT analysis of the firm
Step 7:Selecting and researching potential countries abroad
Step 8: Preparing and implementing your export plan
Step 9: Obtaining financing for your exports
Step 10: Managing your export risk
Step 11: Promoting the firm and its products abroad
Step 12: Negotiating and quoting in exports
Step 13: Revising your export costings and price
Step 14: Obtaining the export order
Step 15: Producing the goods
Step 16: Handling the export logistics
Step 17: Export documentation
Step 18: Providing follow-up support
Step 19: Getting paid
Step 20: Reviewing and improving the export process
Step 21: Export Management
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