Blogs
Understanding Open Account Trade Risk
When exporters sell on open account terms, they ship goods before receiving payment. While this helps build strong buyer relationships, it also introduces a key risk.
The exporter carries the full exposure until payment is received.
What is open account trade?
Open account trade means goods are delivered before payment is made, typically within agreed terms such as 30, 60, or 90 days.
It is one of the most common payment methods in international trade.
Why does this create risk?
Selling on open account terms exposes exporters to:
- Buyer insolvency
- Delayed payments
- External factors affecting the buyer’s ability to pay
The longer the payment period, the higher the exposure.
A simple example
A UAE exporter ships goods worth AED 900,000 on 60-day terms. The buyer delays payment beyond the due date, creating pressure on the exporter’s cash flow.
Even a short delay can affect operations and planning.
How Etihad Credit Insurance (ECI) helps
Etihad Credit Insurance (ECI) supports exporters by:
- Protecting receivables against non-payment
- Helping businesses manage open account exposure
- Supporting safer trade with international buyers