- An open account is an unsecured credit extended to the buyer.
- It should only be used with well-established customers with excellent credit ratings.
- Payment terms should be clearly state when payment is due.
- Because an open account is the perferred term from the buyer's perspective it is easy to negotiate.
- Disadvantages of an open account are:
- No assurance of payment.
- Loss of possession of goods.
- Difficulty of collection.
© 2004 John Michael Pierobon