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Bookkeeping

FOB Shipping Point vs FOB Destination: Whats the Difference?

This arrangement gives buyers more autonomy but also places more obligations on them. The International Chamber of Commerce defines the buyer and seller’s shipping responsibilities. Free on Board (FOB) agreements define which party is liable for costs and risks and when they are liable.

FOB Destination

With FOB shipping point, the buyer assumes responsibility once goods leave the seller’s premises, affecting freight costs and risk. Choosing the correct FOB term impacts accounting, inventory control, and customer satisfaction. Therefore, businesses must clearly define shipping terms in contracts to ensure smooth operations, minimize disputes, and optimize supply chain performance. When choosing between FOB Destination and FOB Origin, several factors should be considered.

However, the main disadvantage of FOB Origin is that the buyer bears the risk and cost of transporting the goods, making it less attractive to buyers who don’t want to take on that responsibility. Furthermore, if anything goes wrong during transportation or delivery, the buyer is responsible for any damages or losses. FOB is a widely used shipping term that applies to both domestic and international transactions. It’s an agreement between the buyer and seller that specifies when the ownership and liability for the goods being shipped transfer from the seller to the buyer.

On its most basic meaning, the Incoterm FOB determines that the seller is responsible for the cargo until it has been loaded into the vessel at the port of origin. FOB shipping point holds the seller liable for the goods until they’re transported to the customer, while FOB destination holds the seller liable for the goods until they have reached the customer. Choosing the right FOB term can significantly impact your business operations, financial records, and risk management, so consider these factors carefully.

Determining Costs and Risks

This crucial juncture determines risk and ownership, influencing the entire shipping process. The buyer bears costs from this moment, significantly affecting shipping and insurance expenses. CIF (Cost, Insurance, and Freight) and FOB (Free on Board) are two widely used Incoterm agreements. With a CIF agreement, the seller pays costs and assumes liability until the goods reach the port of destination chosen by the buyer.

Recording the exact delivery time when goods arrive at the shipping point can be challenging. Constraints in the information system or delays in communication often cause a slight timing difference between the legal transfer of ownership and the accounting records. Failing to check whether a shipment is labeled as FOB shipping point or FOB destination can leave you uninsured, out of pocket, and responsible for damaged or unsellable goods. DAP, or “delivered-at-place,” says a seller agrees to be responsible for transporting goods to a location stated in the sales contract. Under CPT, or “carriage paid to,” the seller pays for delivery of goods to a carrier or nominated location and assumes risks until the carrier takes possession. FAS stands for “free alongside ship” and is often used for bulk cargo transactions.

What is FOB Origin: Responsibilities of the buyer and the seller

  • Known as Incoterms, these terms are published by the International Chamber of Commerce (ICC) to help navigate the complexities of international trade and differing country laws.
  • FOB Destination emphasizes sellers, who are accountable for ensuring safe delivery to the buyer’s designated location.
  • Some companies will offer different international shipping for different types of products.
  • While both terms define the point at which ownership and liability transfer, they vary in who bears the risks during transit.
  • However, it should be noted that whichever F.O.B. term is used, it can be modified by agreement between the parties based upon their individual preferences and also bargaining power.

If the buyer wants the seller to pay for shipping, it has to be agreed upon during the drafting of the contract. FOB destination is a type of Incoterm (international commercial term) used in international trade. It means that a seller pays for all shipping costs and that a transaction is not complete until the goods reach the buyer’s destination undamaged.

  • International commercial laws standardize the shipment and transportation of goods.
  • Constraints in the information system or delays in communication often cause a slight timing difference between the legal transfer of ownership and the accounting records.
  • Under FOB Destination, the seller retains ownership until goods reach the buyer, impacting inventory valuation differently than FOB Origin.
  • This means you’ll need to have insurance and logistics in place to manage any risks during transit.
  • FOB, or Free on Board, is a crucial term in shipping that denotes the point at which ownership and liability of goods transfer from the seller to the buyer.

With FOB Origin, negotiating better deals may involve working with a logistics provider to manage your shipping process and leveraging your buying power to negotiate better rates with carriers. It’s essential to communicate your needs and preferences clearly, understand the local transportation landscape, and negotiate terms that align with your business goals and strategies. It’s worth noting that choosing between FOB Destination and FOB Origin is just one aspect of the broader topic of Incoterms. Incoterms are international trade terms that define the rights and responsibilities of the buyer and seller. The choice of Incoterm depends on the mode of transportation and the type of goods, among other factors.

Learn all about how does FOB work, the responsibilities of the buyer and seller and the difference between FOB Destination and FOB Shipping Point with our complete guide. The buyer is not responsible for the goods during transit; therefore, the buyer often is not responsible for paying for shipping costs. Simultaneously, while the treadmills have not yet been delivered, the buyer has now officially taken responsibility for the goods. The buyer should record an accounts payable balance and include the treadmills in their financial records. The fact that the treadmills may take two weeks to arrive is irrelevant to this shipping agreement; the buyer already possesses ownership while the goods are in transit.

When selecting between FOB Origin and FOB Destination, consider your business needs. Opt for FOB Origin if you want control over shipping arrangements, or choose FOB Destination for convenience. Each of these can be combined with FOB Origin or FOB Destination, forming terms such as “FOB Origin, Freight Collect” or “FOB Destination, Freight Collect”. Previous columns, including those of William J. Augello, may be found on the PARCEL website.

The impact of FOB Destination extends to shipping and insurance costs, which sellers must consider when finalizing agreements with buyers. By understanding these implications, sellers can accurately estimate expenses and ensure profitability in their transactions. The implications of FOB Origin are far-reaching, impacting the overall cost of shipping and insurance coverage. Clarity on these responsibilities fob origin vs destination ensures smoother transactions and mitigates disputes along the supply chain. FOB Origin is where the buyer assumes responsibility for goods upon shipment initiation.

From that point, the buyer is responsible for making further transport arrangements. When goods are labeled as FOB shipping point, the seller’s role in the transaction is complete when the purchased items are given to a shipping carrier and the shipment begins. FOB, or “free on board,” is a widely recognized shipping rule created by the International Chamber of Commerce (ICC). It defines the point when a buyer or seller becomes liable for goods transported by sea.

Company Finances

By clearly defining these terms in their contracts and agreements, parties can help ensure a smooth transfer of goods and minimize the potential for disputes. Ultimately, the best choice between FOB Destination and FOB Origin depends on your business needs and preferences. If you want more control over the shipping process, faster delivery times, and are willing to bear the costs and risks of transporting goods, then FOB Origin may be the best option for you. It’s essential to evaluate your business needs and weigh the advantages and disadvantages of both options before making a decision.

Conclusion: Balancing Cost, Risk, and Convenience in Shipping

It’s important to note that FOB Destination and FOB Origin are just two of many Incoterms that define the responsibilities of buyers and sellers in international trade. Other Incoterms include EXW (Ex Works), CIF (Cost, Insurance, and Freight), and DDP (Delivered Duty Paid), among others. Each Incoterm has its own set of rules and regulations that must be followed to ensure a smooth transaction. FOB status says who will take responsibility for a shipment from its port of origin to its destination port.

How to Handle Disputes in Transactions Involving Either Incoterm: FOB Destination or FOB Origin

In shipping documents and contracts, the term “FOB” is followed by a location in parentheses. The International Chamber of Commerce (ICC) introduced Incoterms to standardize international shipping and freight terms, eliminating ambiguities. FOB is just one of these terms, with others like CIF (Cost, Insurance, and Freight) or DDP (Delivery Duty Paid) offering alternative distributions of risks and costs. As you navigate the world of shipping terminologies, consider the nuances of FOB and how they can impact your transactions. Whether you’re a seasoned professional or just starting out, applying this knowledge correctly can lead to smoother operations and better decision-making. Stay informed, stay proactive, and let FOB work to your advantage in the dynamic realm of international trade.

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Health

HOW ARE SPINAL CORD TUMORS TREATED?

The spine is the central support structure of the body. It is a long bony structure extending from the brainstem to the sacrum. It encloses a thick band of nerves transmitting motor and sensory signals from the brain to the body and vice versa. Any abnormal tissue growth or tumor in this band is called the spinal cord tumor. They may have originated inside the spinal cord (primary) or may have metastasized from any cancer of any other body part (secondary). These tumors may affect the functioning of the body in different ways depending on their type, location, and size. They may have mild effects and may also cause serious disabilities.

These tumors can be treated by various surgical and non-surgical treatment options explained briefly by the best neurosurgeon Dr. Kalyan Bommakanti in this article:

Non-surgical treatment:

Tumors that are non-progressing, asymptomatic, or have mild symptoms can be monitored regularly through MRIs. The treatment options depend upon the requirement and the goal. There are various nonsurgical treatment options available in order to treat these tumors including chemotherapy, radiation therapy, and observation. Some tumors respond well to chemotherapy while others respond to radiation therapy.        

Radiation therapy is mostly used after the surgery in order to remove any remnants, however, it can also be used in cases where surgery is very risky.

Chemotherapy is used to destroy the cancer cells and restrict them from further abnormal growth. It may be used alone or in combination with radiation therapy. However, chemotherapy accompanies a variety of side effects such as nausea, hair loss, vomiting, and fatigability.

Along with these treatments, a number of oral medications are also prescribed in order to overcome the side effects and inflammation caused by these. These drugs are mostly corticosteroids or NSAIDs for pain relief.

Surgical treatment:                 

Surgical options are opted when the tumor can’t be treated by chemotherapy or radiation therapy. The indications for surgery depend on the type of the tumor and the expected damage it can cause mainly due to spinal cord compression. The main goal is to completely remove the tumor, but there is a risk that may compromise some other nerves. Advanced technologies have made it possible to cure tumors that were once considered incurable that too through minimal invasion. If any of the tumors is still left after the surgery, the treatment is continued with chemotherapy or radiation, or both. It takes some time to recover after the surgery, usually, physical therapy helps the patient to preserve the benefits of the surgery and restore his functional and neurological functions.

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Health

HOW ARE SPINAL CORD TUMORS DIAGNOSED?

A spinal cord tumor is an abnormal mass of tissues grown inside the spinal column, it may be present in the lining of the spinal cord (dura) or within the spinal cord. These tumors may be benign (non-cancerous) or malignant (cancerous) in nature. They are classified into two main groups i.e. primary and secondary. Primary spinal cord tumors are those which originate within it however secondary tumors are those that are metastasized from cancer from another body part i.e. lungs, breast etc.

The initial diagnosis is made by a thorough medical examination, including general physical and neurological exams and laboratory tests mainly radiological tests. These tests include X-ray, CT scan, biopsy, bone scan, MRI etc. Multiple tests are done in order to attain accurate results and to identify the actual type and location of the tumor.

  • MAGNETIC RESONANT IMAGING (MRI):

MRI is usually preferred for accurate results, as it shows a clear image of the spinal cord and the surrounding tissues. It uses a contrast agent to highlight the affected area that is injected through a vein into your body. It provides a three-dimensional image that includes all the degenerations, tumors, or any other abnormalities.

  • X-ray:

X-ray is done to see the bony structure of the spine and its outline. However, they are not considered very reliable.

  • CT SCAN:

Ct scans are done in order to evaluate the size and shape of the spinal canal, it is also useful to visualize the bony structures and the contents inside the spinal canal.

  • Bone Scan:

Technetium-99 is used in the bone scan. It is used to identify bony tumors and infections.

These tumors can be treated by surgical or non-surgical methods. This decision depends on the age and overall health of the patient as well as the outcome goals.

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Health

HOW SERIOUS ARE SPINAL CORD TUMORS?

Spinal cord tumors originate within the spinal cord or in the lining (dura) of it enclosed in the bony structure of the vertebral column. The purpose of the spinal cord is to conduct sensory and motor sensations from the brain to the body and vice versa. Hence, any impairment in the spinal cord directly affects the sensations all over the body.

Any abnormal growth in the spinal cord compresses the nerve fiber band in the areas of its pathway i.e. cervical, thoracic, lumbar, and sacral will result in damage. This damage depends on the location and size of the tumor. The tumor’s location determines which part of the body is most likely to be affected. While its size may indicate the extent of the damage and the level of the injury. Any kind of abnormal growth may lead to pain and discomfort.

Spinal cord tumors can result in various levels of impairment including mild to severe damage. The impairments may include pain, numbness, discomfort, and neurological disorders and may even lead to paralysis. The overall understanding of the symptoms and the level of injury depends on the time of diagnosis (the early the diagnosis the better the prognosis), the level of injury, and the nature of cancer. It also depends on whether the compression of the spinal cord is present or not, if present then what is the extent. It is also dependent on the age and overall health of the patient and whether the tumor is benign or malignant.

Even if the tumor is treated, the healing depends on the patient’s health and wellness. The surgical treatment also has some side effects such as infection at the site of surgery, systematic disorders, and infections. There may also be chances of deep vein thrombosis.

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BLOG&NEWS

WHAT ARE THE CAUSES OF SPINAL CORD TUMORS?

The spinal cord is a long tubular band of nerve fibers enclosed in the bony structure called the vertebral column. The tumors that occur within this enclosed structure are called spinal cord tumors. These tumors may be benign or malignant in nature. Most of these tumors are metastasized from other body parts.

Following are the various causes of spinal cord tumors briefly explained by the best neurosurgeon Dr. Kalyan Bommakanti.

1.Genetic mutation:

Genetic defects may be a cause of the origin of the tumors in the spinal cord. Usually, these mutations have been seen in particular families so it is supposed that it runs in the families. These mutations may be congenital or may develop with time. In some cases, spinal cord tumors may occur with the occurrence of some genetic diseases i.e. neurofibromatosis and Von Hippel-Lindau disease.

2. Exposure to cancerous substances:

Direct or indirect exposure to cancerous chemicals or substances may lead to the cause of spinal cord tumors. These substances may transfer by air or by physical contact. These substances may be present in the environment.

3. Weak immune system:

A compromised immune system may lead to spinal cord tumors as it increases the prevalence of spinal cord lymphomas. These lymphomas affect the immune cells i.e. lymphocytes.

4. Metastasized tumors:

Secondary tumors, also known as metastasized tumors, are a common cause of spinal cord tumors. These tumors are spread to the spine from elsewhere in the body. Usually, they spread by entering the systems that are responsible for the exchange of fluids around the body such as the lymphatic system or the bloodstream. These systems transfer the cancer cells with the fluid they are already supplying. Spinal tumors may also develop from the primary tumor present nearby such as in the liver, lungs, abdomen, and bones.

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BLOG&NEWS Sciatica and key hole spine surgery

What are Intradural-extrmedullary and extradural spinal cord tumors?

Spinal cord tumors are the tumors inside or in the lining of the spinal cord enclosed in the vertebral column. These tumors may be benign or metastatic. These tumors are classified on the basis of their location and size.

In this article, the best spine surgeon Dr. Kalyan Bommakanti has explained the Intradural-extramedullary and extradural spinal cord tumors.

  1. Intradural-extramedullary tumors:

The outermost layer of the spinal cord is the dura sheath. The tumors developed in this sheath but outside the spinal cord are the intradural-extramedullary tumors. Usually, these tumors are benign. The symptoms may include weakness and pain.

Intradural-extramedullary tumors are further divided into the following sub-types:

i. Meningiomas:

These spinal tumors are formed in the membranes covering the spinal cord. These tumors are more common in women than men and appears usually in the back in the upper portion. They may be cancerous or not, but usually, they are not cancerous. As the tumor grows, symptoms like pain, weakness, numbness, or bowel/bladder incontinence can be seen.

ii. Neurofibroma:

A Neurofibroma occurs in the outer layering and the nerves of the spine. Usually, it accompanies a condition called neurofibromatosis. This condition is responsible for causing spinal tumors. The growth rate of these tumors is slow.  

iii. Schwannoma:

This type of spinal cord tumor is caused by Schwann cells, these cells produce myelin sheath for the protection of the nerves. It may be congenital. In most cases, they are non-cancerous however they may grow in size and put pressure on the spinal cord. It may result in symptoms like pain, weakness, or numbness.

2. Extradural tumor:

A tumor that is formed outside the dura is known as the extradural tumor. Usually, they are metastatic and have spread from any other part of the body. These tumors also involve the vertebral column. Almost 55% of the spinal cord tumors occur in this part of the spine.

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