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Open account
(1)Definition Open account is an arrangement in which the credit is extended to an individual,firm,corporation or other legal entity based on an estimate of the general ability to pay,asdistinguished from the credit that isextended and supported by anote,mortgage or other formal written evidence of indebtedness.
(2)Procedure of using open account Open account is quite simple to use.First,the seller dispatches the goods.Then he sends the invoice to the buyer and waits for payment from the buyer.When the goods are dispatched,the titleto the goods transfers to the buyer from the seller.
Normally,the seller will stipulate atime period in which payment is to be made.For instance,2/10means that the buyer can take two percent off the invoice amount if he pays within 10days,and n/30means that full invoice value must be paid within amonth.
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