Bookipi University
  • Home
  • Learn
    • Tutorials
    • Small business tips
    • Update notes
  • Success Stories
    • Customer Success Stories
    • Bookipi stories
    • Entrepreneur Stories
  • Business Hub
    • Invoicing
    • Expenses
    • Estimates
    • Payments
    • Proposals
  • Download App
    • iPhone
    • Android
    • Huawei
  • Send invoices for free
  • Home
  • Learn
    • Tutorials
    • Small business tips
    • Update notes
  • Success Stories
    • Customer Success Stories
    • Bookipi stories
    • Entrepreneur Stories
  • Business Hub
    • Invoicing
    • Expenses
    • Estimates
    • Payments
    • Proposals
  • Download App
    • iPhone
    • Android
    • Huawei
  • Send invoices for free

Bookipi University

tutorials & business success stories

Invoicing

What does FOB mean on an invoice?

by Madison La Pira September 15, 2020December 16, 2020
written by Madison La Pira September 15, 2020December 16, 2020 1835 views
What does FOB mean on an invoice?

FOB stands for Free On Board or Freight On Board when part of an invoice.

It refers to the moment where a business that is shipping products is no longer responsible for the items. FOB agreements are often a part of international shipments. 

A destination always follows FOB, indicating when the seller is no longer responsible for the items. These can be FOB Shipping Point or FOB Destination.

Why is FOB on an invoice important?

FOB plays an important part in small business accounting because it clarifies the terms of the shipping agreement. It defines who pays for the shipping costs and who is responsible for a lost, stolen or damaged shipment. 

FOB also shows when the sale is recorded for accounting purposes. When the item reaches the point where the seller is no longer responsible for it, the seller would record the sale. The buyer would then record this as inventory as they are now responsible for the product.

Difference between FOB shipping point and FOB destination

FOB Shipping Point means that the responsibility and ownership of the goods is transferred from the seller to the buyer at the point of origin (seller’s location).

In this situation, the seller records the sale as soon as the goods leave their warehouse/premises/factory. The buyer is then responsible for the product from this point and must cover any delivery and other associated fees. The buyer is also responsible for any damage, loss or theft and the costs they incur.

FOB Destination means that seller’s responsibility for and ownership of the goods transfers to the buyer when the goods arrive at the buyer’s location and in a satisfactory condition. You write FOB Destination with the destination city (i.e. FOB Sydney).

FOB Shipping Point is more beneficial for the seller, whereas FOB Destination is better for the buyer.  

Difference between CIF and FOB

CIF stands for Cost, Insurance and Freight. Both CIF and FOB are agreements used when shipping products internationally between a seller and buyer. The biggest difference between the two is who is responsible for the items while they are being transported.

Under a CIF contract, the seller is responsible for the insurance and any other shipping costs. The seller’s responsibilities include:

  • Transporting goods to the closest port
  • Loading goods onto shipping vessel
  • Costs of insuring goods
  • Costs of shipping

However, in FOB agreements, the seller transfers responsibility to the buyer as soon as the goods leave the location of the seller or once the buyer receives the goods depending on the exact agreement.

–

If you need to make an invoice for your business, you can do so using Bookipi Invoice.

You can make as many invoices as you want for free!

–

Kick start your entrepreneurial career with Bookipi.

Get Bookipi Expense on iOS and Android!

Get Bookipi Invoice on iOS, Android, browser, Mac and Windows!

0 comment
0
FacebookTwitterGoogle +Pinterest
previous post
When to send an invoice
next post
NEW on Invoice: Slack integration

You may also like

How to make an invoice

August 11, 2020

What is invoice reconciliation?

August 25, 2020

What is an invoice?

April 4, 2019

What is a proforma invoice?

November 10, 2021

What are the different types of invoices?

August 18, 2020

When to send an invoice

September 8, 2020

7 ways to get your invoices paid faster

January 13, 2021

About Bookipi

Hello,

We've freed over 600,000 freelancers & small businesses from tedious bookkeeping. Thank you for your support. Bookipi is now available on iOS, Android, Windows, MacOS, Gmail Addon and Chrome Extension. Check out our browser Invoice Template. Check out our new Expense Tracker App. We're developing a Single Touch Payroll Software to support the on going needs of small businesses.

Keep in touch

Facebook Twitter Google + Instagram Linkedin Youtube

Recent Posts

  • Bookipi partners with Spaceship Super on Payroller

    February 21, 2022
  • What is a business proposal and why should you use them?

    January 20, 2022
  • Reduced support over the holiday period

    December 14, 2021
  • NEW: Business Proposals (BETA)

    November 26, 2021
  • What is Stripe? How does Stripe work?

    November 24, 2021

Categories

  • Accounting
  • Bookipi Expense Tutorial
  • Bookipi Invoice Tutorials
  • Bookipi Mini-Websites Tutorials
  • Bookipi stories
  • Bookipi Web Tutorials
  • Business Hub
  • Customer Success Stories
  • Entrepreneur Stories
  • Estimates
  • Expenses
  • Invoicing
  • Learn
  • Payments
  • Proposals
  • Small business tips
  • Success Stories
  • Tutorials
  • Update notes
  • Facebook
  • Twitter
  • Instagram
  • Linkedin
  • Youtube
Footer Logo

© 2021. All Rights Reserved Bookipi Pty Ltd | Privacy policy | Terms of service | Single Touch Payroll


Back To Top