DECK 3 Flashcards
Describes how freight charges are paid and when/where the transfer of ownership occurs
Freight Terms
FOB
Free on Board refers to the payment of freight charges for goods ,products, and equipment.
Determines the point at which title is passed from seller to the buyer.
Different type of FOB
FOB Destination (or Hospital) FOB Shipping Point (or Origin) FOB Destination, Per-pay Freight and Add FOB Shipping Point, Freight Allowed
Supplier absorb all transportation costs and files claims for damages incurred. The facility dos not receive title until the items are received at the dock. This is the most advantageous freight terms for a facility.
FOB Destination (or Hospital)
The title of goods passes to the facility when the shipping agent takes possession. The facility is responsible for all freight cost and for filing any damage claims. This is the most advantageous freight terms for a supplier. The buyer has the right to select the shipper and use the buyer’s contract with the shipper to establish cost.
FOB Shipping Point (or Origin)
The supplier prepays the freight charges and adds this cos to the facility’s invoice. the supplier is responsible for filing damage claim. The title does not transfer until the item is received at the facility dock.
FOB Destination, Prepay Freight and Add
This title passes to the facility when the carrier picks up the goods, but the supplier absorbs or reimburses the facility for the cost of shipping.
FOB Shipping Point, Freight Allowed
Gives the supplier a chance to have an invoice paid faster and give the facility an opportunity to reduce their acquisition costs.
Payment Terms
Various types of Terms and Conditions
- Standard payment terms
- Extended payment terms
- Discount terms
- COD (Collect on Delivery)
- Pre Pay
- Capital Terms
are Net 30 which means the supplier should receive payment within 30 days of the invoice date.
Standard Payment Terms
net 45 or net 60 are often negotiated by the organizations that have cash flow concerns. Suppliers may or may not attempt to raise the cost of goods to offset the extended payment terms.
Extended payment terms
are expressed in a percentage off for quick payments such as 2%, 10 days, net 30. This allows the purchaser to deduct 2% discount of invoice if paid within 10 days of the invoice date; but full amount is due 30 days after the invoice date if the earlier payment is not taken.
Discounted terms
order is shipped on a “collect on delivery” basis; it must be paid on receipt and usually includes shipping charges.
COD( Collect on Delivery)
For capital purchase or device or systems, payment terms will be linked to specific phases of the project. It is advisable when purchase of capital to retain some part of total payment until the capital is operational and /or acceptable.
Capital Terms
Purchase order always has
This document always has
- description of the products, goods being requested.
- The seller (manufacturer or distributor) and their catalog number of the item.
- The quantity of the item
- The agreed upon unit price of the item
- The agreed upon payment terms and conditions
- The agreed upon freight terms and other delivery information.
