An export order is a buyer’s request to buy your goods on stated terms, and reading it carefully is one of the most valuable habits a new exporter can build. A single line about delivery terms, payment, or product codes can change who pays for freight, who carries the risk and when you actually get paid. Many first-time exporters accept an order because the price looks good, then find the small print costly. This guide explains the key terms you will meet and what to check before you say yes.
What an Export Order Actually Contains
Orders come in different formats, such as a purchase order, a proforma invoice or an email thread, but most cover the same core points. They name the buyer and seller, describe the goods, state quantity and price, set delivery and payment terms, and list required documents. Some also add packaging, labelling and inspection rules. Treat the order as the start of a contract, not just a request. Everything you agree to in writing may later decide who is responsible for a delay, a damaged shipment or a payment dispute.
Check the Parties and Their Details First
Start with who is involved. Confirm the buyer’s full legal name, address, tax or registration details and contact person. Check the consignee, which is the party who will receive the goods, and the notify party, who is told when they arrive. These may differ from the buyer. Names and addresses must match exactly across the order, invoice, packing list and shipping documents, because even a small spelling difference can cause problems with customs or a bank. It’s also sensible to check that the buyer is real and reliable before you produce anything.
Product Description, Specifications and Quantity
The description should leave no room for doubt. It should state the product name, model or grade, size, colour, material, packing and any quality standard. Compare it line by line with your own product sheet. Check the quantity and the unit of measure, such as pieces, kilograms or cartons, because a mix-up between units can mean a very different order. If the buyer expects a minimum order quantity, tolerance on weights or a production sample approval, these points should be written down. Vague wording like “as discussed” is a warning sign. Ask for it to be spelt out in the order.
Understand the HS Code
The Harmonised System, or HS, is a product classification run by the World Customs Organisation. The WCO says it is used by more than 200 countries and economies, and that over 98 per cent of the merchandise in international trade is classified in terms of the HS. Each commodity group carries a six-digit code. Customs authorities use these codes to set duties and apply rules, and many countries extend the code with extra digits for their own tariffs. Check that the HS code on the order matches your product and matches your own documents. A wrong code can lead to the wrong duty or delays at the border.
Price, Currency and What the Price Includes
A price only makes sense when you know what it covers. Check the unit price, the total, the currency and whether the price includes packing, freight, insurance or duties. Pay attention to the currency, because exchange rate changes between the order date and the payment date can reduce your margin. If the order is in a currency you don’t normally use, decide who bears the exchange rate risk. Also look at how long the price stays valid. A price quoted six months ago may not cover today’s costs.
Incoterms: Who Does What and Who Carries the Risk
Incoterms are three-letter trade terms that appear in nearly every export order. The International Chamber of Commerce says Incoterms rules are a set of standards for the delivery of goods, clarifying the tasks, costs and risks involved in delivering goods from seller to buyer. Incoterms 2020 entered into force on 1 January 2020 and has eleven rules. Seven apply to any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU and DDP. Four apply to sea and inland waterway transport only: FAS, FOB, CFR and CIF. Check which one the order names, and confirm that it suits the way you plan to ship.
What Incoterms Don’t Cover
Many beginners think an Incoterm settles everything. It doesn’t. An Incoterms guide hosted by Michigan State University’s International Business Centre notes that Incoterms do not identify the goods or list the contract price, do not reference the method or timing of payment, do not specify when title or ownership passes and do not address liability for failure to provide goods that match the contract. Each rule does specify when the risk of loss or damage passes from seller to buyer. So the rest must be written into the order or the sales contract.
Payment Terms: How and When You Get Paid
Payment terms deserve the closest read of all. The US International Trade Administration describes five main methods: cash in advance, letters of credit, documentary collections, open account and consignment. It says cash in advance lets an exporter avoid credit risk because payment is received before ownership transfers, while open account is one of the highest risk options, with goods shipped before payment is due, often in 30, 60 or 90 days. Consignment is described as very risky because the exporter is not guaranteed any payment. For a new buyer, safer terms are usually wise.
Reading a Letter of Credit Carefully
A letter of credit, or LC, is a bank’s commitment to pay you if you present the right documents. The ICC’s UCP 600 rules say a credit is irrevocable even if there is no indication to that effect, and that a complying presentation must be in accordance with the terms and conditions of the credit. Banks have a maximum of five banking days to decide whether documents comply, and a presentation with original transport documents must be made not later than 21 calendar days after the date of shipment, and never after expiry. Every word in the LC must be met exactly, so read it as a checklist.
Delivery Date, Lead Time and Shipping Details
Delivery wording can hide risk. Check whether the date means ready at your factory, loaded on the vessel or arrived at the buyer’s door, because these can be weeks apart. Work backwards from the date, allowing time for production, inspection, packing, transport to the port, customs clearance and the shipping line’s schedule. Check whether partial shipments or transhipment are allowed. Look for penalties for late delivery and see if they’re reasonable. If the date looks too tight, say so now and propose a realistic one.
Packing, Marking and Documents Required
The order may include packing and labelling rules, such as carton size, shipping marks, language on labels and barcode requirements. It will usually list the documents the buyer expects. Common ones include the commercial invoice, packing list, bill of lading or air waybill, insurance certificate and, where needed, a certificate of origin. Make a checklist, and note who prepares each document and how long it takes to obtain. Documents that don’t match the order exactly can delay payment or customs clearance.
Inspection, Quality Claims and Disputes
Look at what happens if something goes wrong. Does the buyer require a pre-shipment inspection, and who pays for it? What is the process for quality claims, and within how many days must a claim be made? Which law applies, and where would a dispute be settled? These sections are easy to skip, but they matter most when a problem arises. If the clauses are vague or one-sided, ask for changes. For a large or first-time order, have a lawyer or an experienced trade adviser read the terms.
A Quick Checklist Before You Accept
Before you confirm, run through a short list. Are the parties’ details right and checked? Is the product description, HS code and quantity clear? Do the price, currency and what it includes make sense? Is the Incoterm named with a place, and do I understand what it means for cost and risk? Are payment terms safe enough for this buyer? Is the delivery date realistic? Do I know every document and packing requirement? Are claims and disputes handled fairly? If something is unclear, ask in writing and get the answer confirmed before you start production.
Conclusion
Reading an export order well is a skill you can learn, and it protects your profit more than any negotiating trick. Check the parties, the goods, the HS code, the price and the Incoterm. Study the payment terms and any letter of credit as if they were a checklist, and confirm delivery, documents and dispute terms. When anything is vague, ask for it in writing. Rules and codes are updated over time, so confirm current requirements with your bank, freight forwarder or customs adviser. Take your next order and mark every term you don’t fully understand, then clear those up before you say yes.
