Open Account (O/A) is a payment method in international trade based on commercial credit, where the seller ships the goods and sends the shipping documents directly to the buyer, who pays within an agreed period (e.g., 30, 60, or 90 days after sight). This method is typically used when both parties have a long-term cooperative relationship and mutual trust, commonly seen within multinational companies or with reputable long-standing customers. Use cases include: a buyer's market where sellers offer O/A to secure orders amid fierce competition; or when both parties have a long-term stable relationship. Precautions: The seller bears significant credit risk and may face buyer default or delay; credit investigation is necessary, and export credit insurance or factoring can be combined. Compared with Letter of Credit (L/C), O/A is simpler and cheaper but riskier; compared with Documents against Payment (D/P), O/A allows the buyer to obtain documents without payment, which is more favorable to the buyer. Therefore, O/A is suitable for reputable, long-term customers, and should be used cautiously with new customers or high-risk regions.
📝 Examples
1. We have been working with this American customer for five years, always using Open Account with payment terms of 60 days after invoice date. (Illustrates O/A for long-term customers with a 60-day credit period.)
2. Due to fierce competition, to secure this order, we agreed to offer Open Account to a new customer, but required a 30% deposit in advance, with the balance to be paid 30 days after the bill of lading copy. (Illustrates using O/A for new customers while reducing risk through advance payment.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
For unfamiliar terms, use GlobalSync's multilingual email helper to confirm with your partner