OPEN ACCOUNT, ADVANCE PAYMENT
NABEEL FIRDAUS BIN MOKHTAR 08DPI12F2019
PUTERA ACHRUFF ICHKANDAR BIN ROSLY 08DPI12F2010
MOHD ASWADI BIN ISMAIL 08DPI12F2016
NORHASHIMAH BINTI MOHD ISMAIL 08DPI12F2028
NUR AZILA BINTU RUSLIN 08DPI12F2023
•Is the part of a contractually due sum
that is paid or received in advance for
goods or services.
•The balance included in the invoice will
only follow the delivery.
•It is called a prepaid expense in accrual
accounting for the entity issuing the
Are the safest method of payment for
Are least attractive option for the buyer
Importer need to pay advance
payment (ex: 50%) of goods price
before exporter sent the goods
When exporter receive the
advance payment, they will sent
the goods to importer
The importer will pay the balance
payment when they receive the
Advancepayment -RISK &BENEFIT-
• Are the least secure payment method for
• Foreign buyers may be concerned that the
goods may not be sent if payment is made in
• An exporter can avoid credit risk because
payment is received before the ownership of
the goods is transferred
• The exporter is relieved of collection
problems and has immediate use of the
Openaccount The goods, along with all the necessary documents, are shipped
directly to the importer who has agreed to pay the exporter’s
invoice at a specified date, which is usually in 30, 60 or 90 days
The exporter should be absolutely confident that the importer will
accept shipment and pay at the agreed time and that the importing
country is commercially and politically secure.
Open account terms may help win customers in competitive
markets and may be used with one or more of the appropriate
trade finance techniques that mitigate the risk of non-payment.
Open account is typically used between established and trusted
o Buyer defaults on payment obligation.
o Delays in availability of foreign exchange
and transferring of funds from buyer’s
o Payment is blocked due to political
events in buyer’s country.
oSeller does not ship per the order
(product, quantity, quality, and/or shipping
oSeller does not ship when requested,
either early or late.
Consignment • Variation of open account in which payment
is sent to the exporter only after the goods
have been sold by the foreign distributor to
the end customer.
• Transaction is based on a contractual
arrangement in which the foreign distributor
receives, manages, and sells the goods for the
exporter who retains title to the goods until
they are sold.
• Payment to the exporter is required only for
those items sold.
• Appropriate insurance should be in place to
cover consigned goods in transit or in
possession of a foreign distributor as well as
to mitigate the risk of non-payment.
partner with a
distributor or a third-
party logistics provider
(3PL) that is based in
its selected overseas
need financing to
ensure that they have
access to working
capital and credit
while waiting for
payment from the
offer programs that
Export credit insurance
HOWTO EXPORT ON
will not receive any money
until part or all of the
consigned stock has been
exposed to higher product
returns if the agents or
consignees simply allow
the goods to rot or
become damaged in
Payment to exporter are