Credit Sale (also known as On Account) refers to a settlement method where the seller does not collect payment immediately after shipment, but allows the buyer to defer payment within an agreed period (e.g., 30 or 60 days). It is commonly used between long-term partners with high mutual trust, or offered by sellers to enhance competitiveness in a buyer's market. Use cases include: repeat orders from regular customers, temporary cash flow difficulties for the buyer, or the seller proactively extending credit to develop new markets. Precautions: The seller must assess the buyer's credit risk to avoid bad debts; clearly stipulate the payment term, overdue interest, and dispute resolution methods; it is advisable to obtain export credit insurance or use letters of credit as safeguards. Compared with 'Payment in Advance,' credit sale carries greater risk for the seller; compared with 'L/C,' credit sale is simpler in procedure but lacks bank credit guarantee; compared with 'Collection' (D/P, D/A), credit sale relies entirely on commercial credit with no bank involvement. Therefore, credit sale is suitable for stable, reputable trading partners and requires credit management.
📝 Examples
1. Given our long-term cooperation, we agree to grant a 30-day credit term for this order. Please make payment within 30 days from the invoice date. (Note: The seller grants the buyer a 30-day credit period, with payment due upon expiry.)
2. This customer has good credit, so we sell to them on account, settling once every quarter. (Note: The seller settles credit sale payments with the buyer on a quarterly basis.)
💡 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