FOB is an acronym for Freight On Board. FOB is related to the shipping of goods. It defines which party (the buyer or the seller) is responsible for the cost of shipping and loading, and who has ownership of the goods while in transit. Fox example the two party’s may agree that once a pallet loads the ship, the buyer is now the owner of those goods even though they are not yet in their possession.
Knowing which party has ownership of the items while in transit is a crucial factor in determining who is responsible if there is damage or loss of the goods while in transit.
Inside the SAP Business One MRP Module, you have the ability to set exactly where in the transaction your businesses takes ownership over the goods. This allows you to provide accurate information for insurance companies. Also, once the goods are in your ownership you can borrow against their value at the bank. So it’s very helpful to be able to set FOB inside your business software.