What is an ICPO
Simply put, ICPO is a document similar to a letter of intent (LOI) used by companies to communicate their intent to enter into a transaction with a foreign-based company and provide verification of purchasing terms, banking information, and company financials.
What an ICPO does ?
It will show the willingness of a buyer to confirm a purchase of a product with a seller. This document tells the seller that the buyer is willing to get into the purchase of noted product with the outlined procedures and given information.
The structure of ICPO
The Irrevocable Confirmed Purchase Order or ICPO consists of different important parts that shows the overall and sometimes detailed aspects of the purchase.
The important parts are:
- Introduction of the buyer and their willingness verbiage.
- The commodity or service in subject.
- Transaction Procedure.
- Specifications and detailed information of the commodity.
- Buyer’s information.
- Buyer’s bank details.
Let’s go through each section and provide an example of the content of each part.
Part 1: Introduction of the buyer and their willingness verbiage
The first part goes simply by telling who is the buyer and what are their responsibility, you may see it as:
We, OOO “Savand Bros” located at Russian Federation, Moscow, hereby state and represent that it is our corporate intention to purchase the commodity “Diesel Gas D2 GOST 305-82”, and for the price and quantity as specified in the terms and conditions stated below. This representation is made with full corporate authority and responsibility.
Part 2: The commodity or service in subject
The next part usually is an summary of the purchase and its overall request.
In the example provided, we assume the buyer has issued the ICPO for purchase of Russian Diesel Gas D2 GOST 305-82 in the Quantity of 50,000 MT per month to be delivered to port of UAE, Fujairah in the terms of CIF with Inspection of SGS, CIQ, one year of supply.
Commodity Diesel Gas D2 GOST 305-82 Origin Russian Federation Specifications Export Standard Quality as attached Quantity 50,000 MT Contract Length SPOT + 12 Months contract with rolls and extension Target Price USD $ 330 Gross/ $ 320 Net Delivery Port CIF Fujaireh Port Inspection SGS, CIQ Payment According to the procedure
Part 3: Transaction Procedure
In this section, buyer will fill out the transaction procedure exactly as seen in the SCO (Soft Corporate Offer) received from the seller. Although it depends on how strict the procedure of the seller is, the buyer may include the prefered to modified procedure as well.
However, this place is very important to be outlined since on the time of contract this is what matter and seller will issue SPA based on the given procedure.
- Buyer issues ICPO with letter of acceptance to seller upon receipt of soft corporate offer.
- Seller issues Sales and Purchase Agreement open for amendment for Buyer review
- Buyer review Draft Contract Agreement, signs and returns copy to Seller
- Seller reviews the Buyers signed contract, acknowledged and send Title of Ownership Transfer Form to Buyer. Buyer files, signs and returns for final execution
Part 4: Specifications and detailed information of the commodity
For a more formal and exact specification of commodity that buyer is seeking to purchase from the buyer is much better to have the detailed information of the commodity. In this case, both parties know what they’re dealing with and there will be less wasted time and prevents paperwork and confusions.
Part 5: Buyer’s information
Seller needs to know who has issued such letter and entered the agreement, therefore buyer needs to fill such information.
Name: John Doe
Company Name: OOO, “Savand Bros”
Address: The legal address of the office.
Tel.: +7 984 215 9855
Mobile: +7 984 215 4023
Email Address: firstname.lastname@example.org
Passport No: N845235165
Passport Copy: [AN IMAGE of FIRST PAGE of PASSPORT]
Part 6: Buyer’s bank details
The draft of SPA (Sales & Purchase Agreement) will use all these info and exactly the banking information provided in this section. The banking details in this section will be used the financial transaction in the contract.
Buyer’s Bank Details
BENEFICIARY NAME: OOO “Savand Bros” BANK NAME: Citi Bank BANK ACCOUNT NAME: OOO “Savand Bros” BANK ADDRESS: Citi Bank, Red Square Branch IBAN: 1851 1215 8415 8515 15125 SWIFT: CTRSMS BANK OFFICER: Mr Big Mac BANK OFFICER EMAIL: email@example.com BANK TEL.: +7 981 845 2125 BANK FAX: +7 981 845 2126
That’s pretty much what it should be inside a ICPO and how it should be filled.
One more thing
When issuing the ICPO letter, always remember to have it on your company head letter and stamp and sign it at the end.
Free ICPO template
You can download a free ICPO template and use it via the link below: