FOB Destination VS FOB Shipping Point

Описание: Who Owns the Inventory?

As a general rule, goods should be included in the inventory of the business holding legal title.

When goods are being shipped (in transit) from the seller to the buyer, who owns the inventory that is on a truck or railroad car—the seller or the buyer?

We need to know the terms of shipment whether FOB Destination or FOB Shipping Point.

When goods are being shipped (in transit) from the seller to the buyer, If the seller pays for the shipping costs, the seller owns the merchandise from the time it is shipped until it is delivered to the buyer. This is called FOB Destination.

When goods are being shipped (in transit) from the seller to the buyer, If the buyer pays the shipping costs, the arrangement is known as FOB (free-on-board) shipping point, and the buyer owns the merchandise during transit.

With a consignment arrangement, suppliers (the consignors) provide inventory for resale while retaining ownership of the inventory until it is sold. (This is referred to in the business world as a “sale-through” arrangement as opposed to a “sell-in” arrangement where sales to distributors are recorded as revenue.) The firm selling the merchandise (the consignee) merely stocks and sells the merchandise for the supplier/owner and receives a commission on any sales as payment for services rendered.

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