A factory quotes EXW. Another offers FOB, and a third sends a CIF price that looks convenient because freight is included. Finance wants to know which total to approve and when to release the balance. Those are two different questions: the delivery rule allocates responsibilities, while the purchase agreement sets the payment milestones.
The purchasing situations are fictional, generalised examples. This article is general information, not legal, tax or investment advice. A delivery term does not guarantee quality, shipment or recovery of an advance.
Start with a named place and rule version
Ask the seller to identify the delivery rule, named place or port and applicable version in the quotation and contract. “FOB China” is too vague for an approval file. Purchasing needs to know where the supplier's obligation ends and what the buyer must arrange next.
The ICC's Incoterms overview explains that these rules allocate costs, risk and obligations. They are not a complete sales contract. Keep the agreed payment schedule, product specification and remedies in separate contract provisions rather than expecting a shipping abbreviation to do that work.
EXW: price the work beyond the factory
Under EXW, delivery occurs when the seller makes the goods available at the named place, not loaded on the collecting vehicle. The buyer takes on the onward arrangements, including export clearance responsibilities. The ICC's EXW explanation describes that delivery point.
Before accepting the apparent saving, ask a forwarder how collection, loading and export formalities will work for this purchase. Obtain a separate cost breakdown and confirm who can carry out each step. If the proposed arrangement does not fit the buyer's ability to handle export clearance, discuss another delivery rule with the seller and forwarder before paying a deposit.
FOB: do not stop the budget at the port
For FOB, the seller delivers on board the buyer-nominated vessel at the named port of shipment; risk passes there. The seller handles export clearance. The buyer needs to budget onward freight and its other responsibilities, not just compare the factory's price with an EXW quote. These distinctions are set out in the ICC checklist.
FOB is a sea or inland-waterway rule. Ask the forwarder whether it fits the actual cargo handover, particularly where containers go to a terminal before vessel loading. Do not use “FOB” as a generic label for an air shipment. Agree the appropriate rule and handover point first.
CIF: freight paid is not risk retained
Under CIF, the seller arranges freight and insurance to the named destination port, but risk transfers when goods are on board at the shipment port, not on arrival. The ICC's discussion of risk transfer explains why paying carriage to a destination does not move that risk point there.
CIF's default insurance level is minimum cover, according to the ICC overview. Review the actual policy with your adviser. Ask the forwarder to identify destination handling, clearance, duties and onward delivery costs rather than treating CIF as a delivered-to-warehouse price.
Put the deposit and balance in writing
None of these labels supplies a deposit percentage or an automatic balance deadline. Agree what the advance starts, what evidence releases the balance and how failed inspection changes that decision. A seller's responsibility to put goods on a vessel is not proof that your quality checks have passed.
Use the deposit-schedule guide and inspection-release checklist to define those milestones. If freight is revised after the deposit, reconcile the new invoice total and deposit credit before approving the remaining amount.
Approve the purchase and the payment separately
Keep the quotation, delivery term, transport budget, inspection evidence and balance approval together. Then verify beneficiary details and obtain a quote for the actual payment. The invoice-document guide helps distinguish a purchase document from evidence that money arrived.
Use pay an invoice to ask A2vanta about the proposed invoice and funding route before sending funds. Route acceptance and payment terms need confirmation; neither replaces the transport agreement or your decision to release the supplier's balance.