Open account
Back to the Trade Finance Guide
Ossiano Guides · Instrument library
The exporter ships the goods first, and the importer pays later, on an agreed date.
Terms like this have a quick explainer. Tap or hover on them.
01 · In plain words
You ship first, and the buyer pays you later on the date you agreed
In an sale, the exporter ships the goods before payment is due. Payment is typically due in 30, 60 or 90 days (US International Trade Administration).
So the exporter gives the buyer time to pay. Until the due date, the exporter is giving the buyer credit. The money for the goods stays with the buyer until the due date.
The trade documents go straight from the exporter to the importer. The banks' job is to move the money on the due date.
The US International Trade Administration calls open account one of the most helpful options for the importer, in cash flow and cost. It also calls it one of the highest risk options for an exporter (US ITA, Methods of Payment).
Who is involved
- The , the seller, ships the goods and waits to be paid.
- The , the buyer, receives the goods and pays on the due date.
- The buyer's bank sends the payment. The seller's bank receives it and credits the seller.
- Sometimes an insurer covers the unpaid invoice with . See Trade credit insurance.
- Sometimes a finance provider buys or funds the unpaid invoice. See Factoring.
02 · How it works
Six steps take the deal from the contract to payment on the due date
Figure 1 · Interactive
An open account sale, step by step
Read down the steps. The last step is where the exporter is paid.
Source for the open account terms: US International Trade Administration, Trade Finance Guide, July 2022, Chapter 6.
03 · What it means for you
The exporter waits to be paid and carries the risk, and the importer gets the goods before paying
Figure 2 · Interactive
What open account means for each side
Choose your side of the trade.
04 · Worked example
On a $1 million invoice, 90-day terms cost the exporter an illustrative $12,500
This example uses round, made-up numbers. Say the exporter's money costs it 5.00% a year. That is its cost of funds while it waits to be paid. Interest is worked out on a 360-day year. The longer the terms, the higher the cost.
Figure 3 · Illustrative
The exporter's cost of waiting on a $1,000,000 invoice
Illustrative inputs: 5.00% a year, 360-day year. The 90-day cost is highlighted.
Made-up rate, worked out by our checking script: invoice x annual rate x days / 360. Under cash in advance this cost sits with the buyer instead.
05 · When to use it
Open account suits low-risk buyers and markets, or deals backed by insurance
Good fit when
- You trade with a low-risk buyer or in a low-risk market (US ITA).
- You compete for customers and need to offer terms to win them (US ITA).
- You cover the invoice with export credit insurance, which lets you offer open account terms while lowering the risk of not being paid (US ITA).
Another tool may suit better when
- The buyer is new, or the deal carries higher risk. The US ITA suggests a letter of credit in these cases, when you trust the buyer's bank (US ITA).
- Open account is too risky and the buyer will not accept a letter of credit. Look at a documentary collection (US ITA).
- You want open account terms with a bank behind the buyer. A standby letter of credit as a condition of open account terms lowers your risk of not being paid (US ITA).
- You cannot fund 30 to 90 days of unpaid invoices. Look at factoring, or ask the buyer for cash in advance.
06 · Rules and a real case
The sales contract sets the terms, and a court case shows open account used beside a letter of credit
The sales contract and its delivery term set each side's duties. came into force on January 1, 2020 (ICC). Ways to finance open account invoices and payables, called , are defined in the Standard Definitions for Techniques of Supply Chain Finance, 2016 (Global Supply Chain Finance Forum). Where both banks agree to a , the ICC's URBPO rules of 2013 apply (ICC).
A real case. In Trafigura PTE Ltd v Societe Nationale de Raffinage, decided on July 30, 2026, the High Court of England and Wales described a contract where Trafigura agreed to sell gasoil and gasoline to SONARA. The contract split payment. Half of each cargo was paid by letter of credit and half on open account (High Court judgment). One contract can mix payment methods.
Summary
Open account helps the buyer, and the exporter carries the wait and the risk
The exporter ships first and is paid on the due date, typically 30, 60 or 90 days later. The importer gets the goods before paying. The exporter carries the risk of not being paid and the cost of waiting, so insurance or finance can help when the buyer or market carries more risk.
Related guides: Open account trade; The payment terms spectrum; Trade credit insurance; Receivables finance. Related cards: Cash in advance; Letter of credit (sight); Factoring. Every term is in the Trade Finance Glossary.
Sources
- US International Trade Administration, Trade Finance Guide: A Quick Reference for US Exporters (2022 edition), Chapters 4 to 6, July 2022. Supports: definition, typical 30, 60 or 90 day terms, when open account fits, letters of credit and documentary collections as alternatives, standby LC as a condition of open account
- US International Trade Administration, Methods of Payment, undated. Supports: open account as one of the most helpful options for the importer and one of the highest risk options for an exporter
- US International Trade Administration, Export Credit Insurance, undated. Supports: insurance that supports open account terms, 90 to 95 percent short-term cover
- International Chamber of Commerce, Incoterms 2020, in force January 1, 2020. Supports: delivery terms in the sales contract
- Global Supply Chain Finance Forum, Standard Definitions for Techniques of Supply Chain Finance, 2016. Supports: finance built on open account invoices
- International Chamber of Commerce, ICC launches first-ever rules for open account trade (URBPO), April 17, 2013. Supports: bank payment obligation rules
- High Court of England and Wales, Commercial Court, Trafigura PTE Ltd v Societe Nationale de Raffinage [2026] EWHC 1914 (Comm), July 30, 2026. Supports: the real case
The real economy moves through Ossiano.
