Terms of trade define both the logistics charges associated with purchasing items from external suppliers and the party responsible for paying each. These trade terms are specific to the purchase of items and define the obligations of the customer and seller for the delivery of goods. Terms of trade are also referred to as Inco Terms. Inco Terms are defined by the International Chamber of Commerce and used in international contracts.

Terms of trade only apply to the logistics charges associated with the delivery of goods, not the terms of payment for those logistics charges. Define payment terms in Credit Terms Create (36.1.10.1).

During purchase receipts, the system determines which logistics charges to accrue based on the terms of trade assigned to the purchase order. When the receiving site is responsible for a logistics charge payment, the logistics charge is accrued since the charge is payable to a third-party logistics supplier, not the item supplier. Logistics charges are not accrued when they are the responsibility of the item supplier.

Use Terms of Trade Maintenance (2.15.4) to indicate who is responsible for arranging the transportation of goods, define each logistics charge associated with a purchase, and indicate whether you (the customer) or the item supplier is responsible for the logistics charge payment.

When you (the customer) are responsible for transporting the goods, the system automatically populates the Transport Days field when a new order is created in Purchase Order Maintenance (5.7), Blanket Order Maintenance (5.3.1), and Supplier Scheduled Order Maintenance (5.5.1.13) with the Transit Days value in Delivery Transit Time Maintenance (2.16.1).

Each record for terms of trade can include all of the logistics charges associated with a purchase, with the responsible party assigned to each logistics charge.

See Tracking Shipments and Paying for Goods-In-Transit.