Incoterms, payment terms and samples: the commercial basics distributors ask about first

Before a distributor looks at your design or your test reports, its buyer wants three plain answers: where does your price stop, when do we have to pay, and can we try it first. These are the commercial basics, and a supplier who hesitates on them looks like a supplier who has not exported before.

Putting it simply: quote every price on a named Incoterms 2020 rule and a named place; offer payment terms that stay within the frame of Directive 2011/7/EU and tighten them only for the first order; and decide your sample policy before anyone asks.

Incoterms 2020: what they settle

The Incoterms rules are published by the International Chamber of Commerce (ICC). They are "a set of eleven three-letter trade terms, reflecting business-to-business practice in contracts for the sale and purchase of goods", and they clarify "the tasks, costs and risks involved in the delivery of goods from sellers to buyers". The current edition, Incoterms 2020, entered into force on 1 January 2020.

Seven rules work for any mode of transport: EXW (Ex Works), FCA (Free Carrier), CPT (Carriage Paid To), CIP (Carriage and Insurance Paid To), DAP (Delivered at Place), DPU (Delivered at Place Unloaded) and DDP (Delivered Duty Paid). Four are for sea and inland waterway only: FAS, FOB, CFR and CIF. For goods on pallets going by road across Europe, the first group is the one that matters.

An Incoterms rule is a delivery term. It does not say what the price is or when it is paid; those belong in separate clauses of your offer.

The rules distributors actually see

EXW means you make the goods available at your premises and everything after that is the buyer's problem: transport, export formalities, import formalities. The ICC's own checklist notes that small exporters like EXW because it seems to need the least knowledge of export procedures, then advises them to use it "if at all, only for domestic sales". A distributor reading "EXW" in a price list sees a supplier who has not thought about how the goods will arrive.

FCA hands the goods to the first carrier engaged by the buyer, at your premises or at a terminal, with export clearance on you. It is the sensible minimum for a supplier who wants the distributor to organise freight.

DAP is the usual answer for a distributor's warehouse. You carry costs and risk to the named place, "NOT including the unloading of the goods at destination", and you do not pay duties or handle import formalities. DPU is the same but you unload.

DDP gives you "total responsibility up to delivery at the buyer's premises or the named delivery point, including import clearance, which may pose problems", in the ICC's words. Some distributors ask for DDP because it means the fewest obligations for them. Accept it only where no customs border is crossed or where you have a forwarder who can act as importer for you.

Whatever you choose, write the rule, the edition and the place: "DAP Lyon warehouse, Incoterms 2020". A rule without a place is not a term.

Payment terms: the European frame

Directive 2011/7/EU sets the rules on late payment in commercial transactions across the EU. For business-to-business sales:

• If no payment date is agreed, the creditor is entitled to interest from 30 calendar days after the debtor receives the invoice.
• A payment period fixed in the contract "does not exceed 60 calendar days, unless otherwise expressly agreed in the contract and provided it is not grossly unfair to the creditor".
• The Directive sets a floor, not a ceiling: some countries cap business payment terms by law — France, for example, at 60 days from the invoice date or 45 days end of month (Code de commerce, article L441-10), with administrative fines of up to EUR 2 million for a company — so check the buyer's country.
• Statutory interest for late payment is the reference rate plus at least eight percentage points, and the creditor is entitled to a fixed sum of EUR 40 for recovery costs on top of the interest.

For public authorities buying from businesses, the default is 30 days, extendable to 60 for certain public entities. This matters to you indirectly: a distributor selling to hospitals or municipalities is paid on those terms and expects comparable credit from its suppliers.

A proposal to replace the Directive with a regulation and a strict 30-day cap was published by the European Commission in 2023 and adopted by the European Parliament at first reading in April 2024; as of October 2026 the Parliament's Legislative Observatory shows the file (2023/0323(COD)) awaiting the Council's first-reading position. Until that changes, the 2011 Directive is the frame.

What that means in an offer

The Directive gives the ceiling, not the custom. Local practice varies by country and by trade, and "typically" is the honest word: terms of 30 days net are common, terms calculated from the end of the month exist in some markets, and longer terms appear where a distributor holds large stock for you. Do not try to guess the local custom in your first e-mail; state your own structure and let the distributor negotiate.

A structure that works for most manufacturers entering a new country:

1. First order: prepayment or a deposit with balance before dispatch. Any serious distributor accepts this once, because it also tests your reliability.
2. Second and third orders: short open-account terms, within the 30-day default.
3. Established account: your standard terms, within the 60-day frame unless both sides expressly want otherwise.

Consider credit insurance on the distributor before step 2, and offer a small discount for early payment rather than lengthening terms when the distributor pushes.

Samples: decide the policy before the question

Every route into a distributor involves samples. A dealer wants a chair on the showroom floor; a buying group wants pieces for its trade fair stand; a head office wants units for quality checks and photography; a workwear distributor wants garments to wash and wear; a medical distributor wants units for its clinical contacts to evaluate.

Decide four things in advance and write them in your supplier pack:

• Price. Free, at cost, or invoiced and credited against the first order. Free samples for small items and credited samples for large ones is a common compromise.
• Shipping. Who pays freight, and on which Incoterms rule. Ship samples exactly as you would ship an order, with the same labelling and documents; a sample that arrives badly packed answers the distributor's question about your logistics.
• Ownership and return. Whether samples stay with the distributor, go back, or are sold off as display stock.
• Follow-up. When you will ask for feedback, and in what form. A sample without a scheduled follow-up is a gift.

What this means for a manufacturer

Put the three answers on the first page of your offer: price on a named Incoterms 2020 rule to a named place (DAP to the distributor's warehouse is the normal expectation), payment terms with a first-order exception and a path to open account inside the Directive's frame, and a written sample policy. A distributor's buyer can then price you, risk you and try you without a single follow-up question, which is exactly what makes them reply.