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Please advise on the matters needing attention when using the O/A payment method
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TRACKING NO. 20260219 / GLOBAL Zhongshen Trade · 23+ Years of Expert Trade Agency
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We have an old European client who has cooperated with us three times and all the T/T payments went smoothly. Now they want to adopt the O/A (Open Account) 60-day payment method. We haven't handled accounts receivable before and would like to ask if this payment method carries significant risks. What specific matters should we pay attention to?
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
Under the Open Account (O/A) payment method，your core risks lie in buyer creditworthiness and compliance. First，you must conduct a buyer credit investigation through China Export & Credit Insurance Corporation (Sinosure) or a third-party agency to obtain a credit limit. The contract must clearly stipulate payment terms，breach of contract liability，dispute resolution clauses (arbitration is recommended)，and retain all original and duplicate documents for at least five years. It is strongly recommended to purchase export credit insurance，otherwise，if the buyer goes bankrupt or refuses to pay，you will lose both the goods and the payment. Additionally，note that the transaction method on the customs declaration under O/A should be filled in as "FOB" or "CIF" and other actual terms，strictly consistent with the commercial invoice，to avoid customs inspection risks.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
From a logistics operational perspective, the choice of transport terms under the O/A payment method directly affects your risk exposure. It is recommended to adopt CIF or CFR terms, which allow you to control the ownership of the goods until they are loaded onto the ship, thereby at least avoiding the extreme situation where the goods have been shipped but the client goes missing.
Operational process:
1) Send scanned copies of the bill of lading, invoice, and packing list to the client via email within 24 hours after shipment and formally request payment;
2) Send a friendly reminder 7 days before the payment due date;
3) Suspend the production of subsequent orders on the day of overdue payment.
Remember: Never send the original bill of lading too easily, especially for ocean freight bills, as they serve as your final bargaining chip in negotiations.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
The essence of O/A payments is a game of trust. You need to transform risk negotiation into cooperation sincerity. You can say to the client: "We value long-term cooperation, but O/A payments put pressure on our cash flow. Could you first allow O/A payments for 30 days with a limit of $50,000, and gradually relax the restrictions based on our performance?" At the same time, require the client to provide their financial statements and bank credit certificates for the past two years. This is not a sign of distrust, but part of our internal risk control process. Another tactic: split large orders into multiple small batches for delivery, with each batch settled separately to reduce single-order risk exposure. Remember, your attitude should be professional and flexible, expressing willingness to cooperate while firmly adhering to your bottom line.