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Incoterms and how to Configure Incoterms?

Updated Jun 01, 2021

What are Incoterms?

Incoterms is an international commercial term that defines the terms of sale and the passing of risks for the import and export of merchandise. Incoterms play an important role in global business. In other words, Incoterms is the codification of international rule for the interpretation of the commonly used terms in foreign trade.

SAP Standard Incoterms

SAP Standard Incoterms include the following:

  1. EXW - Ex Works
  2. FCA - Free Carriage and Freight
  3. FAS - Free Alongside Ship
  4. FOB - Free On Board ship
  5. CFR - Cost and Freight
  6. CIF - Cost, Insurance, and Freight
  7. CPT - Carriage Paid To
  8. CIP - Carriage and Insurance Paid To
  9. DAF - Delivered At Frontier
  10. DES - Delivered Ex Ship
  11. DEQ - Delivered Ex Quay
  12. DDU- Delivered Duty Unpaid
  13. DDP - Delivered Duty Paid

How to Create an Incoterm?

Please follow the steps below to create new Inco Terms:

Enter t-code SPRO in SAP command field and press Enter

T-code SPRO

On the next screen click the SAP Reference IMG button

SAP Reference IMG

Next, go to the following SAP path:

Sales and Distribution --> Master Data --> Business Partners --> Customers --> Billing Document -->IncoTerm --> Define IncoTerm.

Infoterm

Click on the New Entry button on the next screen.

New Entry Button

Now, enter the Name, Description for your new Incoterm. You can make the incoterm's location mandatory or not according to your requirement.

Name Description for Incoterm

Click on the Save icon or press Cntrl+S to save the new incotermSave new incoterm

Now, enter your customizing request number in the prompt box and press Enter

Customizing Request Incoterm

We have created a new Incoterm 'STH' in our SAP system now we need to assign it in your customer master so that whenever an order is generated for that customer, it will populate automatically into the sale order.

Comments

  • 28 Aug 2017 2:41 pm Prashant Muttepawar

    In the sales order if u want to differentiate the Business data of the header from item,

     

    You have to Uncheck the BUSINESS ITEM in the Item category of the item which allows u to maintain different Business data

    This u can do in the Item category in Transaction VOV7.

     

     
  • 28 Aug 2017 2:42 pm Prashant Muttepawar

    In customer master Sales Area Data, go to "Billing Documents" tab where you can see the fields "Incoterms" and "Terms of Payment".

    Whatever you maintain here, that will flow by default into your sale order both at header level and also at item level.

     
  • 28 Aug 2017 2:42 pm Prashant Muttepawar

    You can define incoterm at

    spro-sd-masterdata - billing doc-Define incoterms.

     
  • 28 Aug 2017 2:43 pm Prashant Muttepawar

    Incoterm is determined by customer master - Sales Area Data - Billing Tab.

    For configuring new incoterm u can configure in SPRO.

     
  • 28 Aug 2017 2:46 pm Prashant Muttepawar

    The Incoterms are configured in

     

    IMG-> SALES AND DISTRIBUTION-> MASTER DATA->BSINESS PARTNERS-> CUSTOMERS->BILLING DOCMENTS->DEFINE INCO TERMS.

    And then assign the Inco terms defined in the customer master in the Sales area tab in the Billing docments screen.

    Suppose in the sales order, there are two items. For the first item, business data must be identical to the sales document header, while the second item allows different business data. How to cofigure this scenario.

    In the sales order if u want to differentiate the Business data of the header from item,

     

    You have to Uncheck the BUSINESS ITEM in the Item category of the item which allows u to maintain different Business data

    This u can do in the Item category in Transaction VOV7.

    You can manually go to change mode of the sales order 2nd line item and change the data required for the line item manually in Item level like Incoterms, Payment Terms etc.

    If you want different from line item to line item then you need to enter manually at item level.

    ---

    You can Configure Incoterms in the following path:

    SPRO>Sales and Distribution>Master Data>Business Partners>Customers>Billing Document>Define Incoterms.

    Once configured you can directly maintain the same in Customer Master--> Sales Area Data >Billing Document> Incoterms.

     

     

     
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