Open account is a method of payment within the trade finance. It is a method in which the goods are shipped and delivered before payment is made, which in global sales is in 30, 60 or 90 days. This can be considered as one of the most advantageous options for the importer in terms of cash flow and cost, but meanwhile it is highest risk options to an exporter. So it is better that more attention must be given while offering open account terms and the exporter must seek extra protection using export credit insurance. Open account payment in international trade is not preferred by many customers as there is involvement of more risks.

There exists high importance of trade finance as this is the only way to enhance the global trade and facilitate importer and exporter in their business

• Trade Finance allows you to handle your business transactions quickly and efficiently.
• It is flexible and simple to use - monitoring of each individual transaction from start to finish is possible and you can always enquire about previous transactions
• It covers and helps you to deal with the risks present within the international trade which includes legal risks, political risks, marketing and financial risks.
• Easy cash flow management
• It leads to more efficient allocation of resources and lower cost per unit
• Helps to widen the range of choice of commodities
• Helps the company to grow and increase trade

With this payment method, supplier can avoid credit risk as payment is received before the goods are transferred. In this most commonly used options are wire transfers and credit cards. From recent times escrow services are also becoming another option for small export transactions. Moreover it is termed as the least attractive option for the buyer as unfavourable cash flow is generated by this. Importers are also concerned that the products may not be sent if payment is made in advance.