GlossaryEN1 min readUpdated: Jun 13, 2026

Incoterms payment terms effect

Incoterms govern delivery location, cost allocation, and risk transfer between seller and buyer—they do not specify payment terms.

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Last updated: 13 June 2026Published: 27 January 2026

Source: https://iccwbo.org/resources-for-business/incoterms/

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Incoterms 2020 Simulator: Who bears costs & risk?

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Definition & Explanation

Incoterms govern delivery location, cost allocation, and risk transfer between seller and buyer—they do not specify payment terms. Payment timing, currency, method, and security arrangements are established in the sales contract independently of the chosen Incoterm. Although Incoterms may have indirect effects (for instance, determining who bears freight charges), these do not dictate payment execution. In practice, traders and financiers must clearly distinguish between Incoterms rules (governing goods transfer) and payment terms (governing cash flows).

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Compare IncotermsClarify duties, cost and riskOpen Find HS codeDetermine the tariff number for customsOpen Calculate customs valueWork out import duties and customs valueOpen Calculate transit timeEstimate duration per transport modeOpen

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Incoterms payment terms effect

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Related Terms

Incoterms tax costs

Incoterms payment term

Deferred Payment

Net payment term

payment term

Payment clause in a letter of credit

Incoterms 2020 Simulator: Who bears costs & risk?

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