O/A (Open Account) is a payment method in international trade where goods are shipped first and payment is collected later. After shipment, the seller sends the full set of documents directly to the buyer, who pays within an agreed period (e.g., 30, 60, or 90 days). It is commonly used between long-term, trusted trading partners, or by sellers in a buyer's market to enhance competitiveness. Precautions: The seller bears significant collection risk, so the buyer's creditworthiness must be assessed; export credit insurance or factoring can be used. Payment terms and default liabilities should be clearly defined. Compared with L/C (Letter of Credit), O/A has no bank credit guarantee, is simpler in procedure but higher in risk; compared with D/P (Documents against Payment), under O/A the buyer can obtain documents without payment, reducing capital occupation. O/A helps sellers expand markets but requires strengthened accounts receivable management.
📝 Examples
1. We have cooperated with this American client for years and have always used O/A 60 days, settling once at the end of each quarter. (This indicates O/A 60 days means payment within 60 days after shipment.)
2. Due to fierce competition, we agreed to use O/A 30 days for a new client, but required a bank guarantee. (This indicates O/A 30 days supplemented by guarantee measures to reduce risk.)
💡 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