Which of the following statements is true about open account?
A) It is the most preferred method of payment in international business.
B) Exporters can sell any open accounts in their possession, to avoid having to wait weeks or months to be paid for their exports.
C) Exporters use this approach only with customers of long-standing or excellent credit, or with a subsidiary owned by the exporter because of the risk involved.
D) It is a contract between the banks of the buyer and seller that ensures payment from the buyer to the seller upon receipt of an export shipment.

Question

Quizplus · Accepted Answer

Open account is a method of payment where the exporter ships the goods and the importer receives them before payment is made. This approach is usually used only with customers of long-standing or excellent credit, or with a subsidiary owned by the exporter because of the risk involved. It is not the most preferred method of payment in international business, and it is not a contract between banks. Selling open accounts is also not a common practice.

Which of the Following Statements Is True About Open Account