Open Account Trade
From Open Risk Manual
Definition
Open Account Trade refers to trade transactions between a Seller and a Buyer where transactions are not supported by any banking or documentary trade instrument issued on behalf of the buyer or seller. The buyer is directly responsible for meeting the Payment Obligation
Example
Where trading parties supply and buy goods and services on the basis of open account, terms an invoice is usually raised and the buyer pays within an agreed time frame. Open account terms can be contrasted with trading on the basis of cash in advance, or trading utilising instruments such as Documentary Credit, as a means of securing payment.
