Open account trade is a sale in which goods or services are delivered before payment is due. The exporter extends credit directly to the buyer, commonly under an invoice with a stated payment term.
How does Open Account Trade work in practice?
The seller ships and invoices without receiving payment or a bank payment undertaking first. The buyer pays on the agreed due date, often after receiving and checking the goods. The seller finances the period between shipment and collection and carries the buyer’s credit risk unless the receivable is insured, factored or otherwise supported.
What records support Open Account Trade?
Retain the contract, credit approval, proof of delivery, invoice, due date, communications, collections and any insurance or finance assignment.
What does Open Account Trade not establish?
Open account terms can support sales but expose the seller to commercial and country risk until payment arrives.
