Open Account Table

What is open account trade?

Open account trade is a payment arrangement where goods are shipped and delivered before payment is due.

The seller extends credit to the buyer, and the buyer pays according to the agreed payment terms, such as 30, 60 or 90 days after invoice date or shipment.

Why does open account trade matter?

Open account trade is attractive to buyers because it improves cash flow. Buyers receive goods before paying for them.

For sellers, open account trade can help win business but increases payment risk. The seller may have already shipped the goods before receiving payment.

What should be agreed clearly?

Open account transactions should clearly define:

• buyer and seller details

• goods and quantities

• price and currency

• payment due date

• Incoterm

• delivery requirements

• required documents

• dispute process

• late payment consequences

Common mistakes

Common mistakes include:

• extending credit without assessing the buyer

• unclear payment due dates

• weak documentation

• poor visibility over shipment status

• no escalation process for late payment

• assuming a purchase order is enough protection

How iTradeDigital helps

iTradeDigital helps open account trade become more structured. It gives buyers and sellers a shared workspace to agree terms, manage documents, track responsibilities and create a clearer transaction record.

Related terms

• Payment terms

• Payment obligation

• Commercial invoice

• Documentary collection

• Trade finance

FAQs

Is open account good for buyers?

Yes. It is often favourable to buyers because payment happens after shipment or delivery.

Is open account risky for sellers?

Yes. Sellers carry more payment risk because they ship before receiving payment.

Can open account trade be made safer?

Yes. Clear documentation, credit checks, insurance, guarantees and structured workflows can help reduce risk.