Reply To: Discuss the topic open account in trade finance.

[Eddie Philips]

An open account transaction is a sale where the shipped goods are delivered before the payment is due. It is advantageous to importers as they experience a good cash flow. But it is a great risk for exporters. The competition in exports make buyers pressure the exporters for open account transaction, and it is prevalent abroad to extend the seller’s credit to the buyer. Usually, exporters who do not want to risk extending credits lose their customers to competitors. But exporters can provide a competitive open account by mitigating non-payment risks and using export credit insurance.