Open Account
Open Account is a method of payment in international trade in which the exporter ships and delivers the goods before receiving payment, with the importer agreeing to pay within an agreed period (for example 30, 60 or 90 days after delivery). It is the most buyer-favourable arrangement and the opposite of cash-in-advance.
Open account is simple, cheap and common in established, trusting relationships and competitive markets (where offering credit terms wins business), but it carries the most risk for the exporter, who ships without any payment guarantee and must wait — exposed to non-payment, delay and the cost of financing the receivable. Exporters often mitigate this with trade credit insurance and by financing the receivables through factoring or supply-chain finance. As global trade has grown more competitive, open account has become the dominant payment method, with the secured alternatives (letters of credit, collections) reserved for higher-risk counterparties. Knowing where open account sits on the risk spectrum is central to structuring competitive yet safe export terms.
Open account is what buyers want and competitive markets demand — pay after delivery — but it leaves the exporter fully exposed to non-payment while financing the wait. That is why it goes hand in hand with credit insurance and receivables finance. As it has become the dominant way global trade is paid, understanding and de-risking it is central to modern export strategy.
Why is open account risky for exporters?
Goods are shipped and delivered before payment, with no bank guarantee, exposing the exporter to non-payment, delay and the cost of financing the receivable.
How do exporters manage open-account risk?
With trade credit insurance and by financing the receivables through factoring or supply-chain finance.