Definition

1. Noun:
   • A credit arrangement with a business: An "open account" is a type of credit where a seller provides goods or services to a buyer without requiring immediate payment, based on an agreement that the buyer will pay at a later date, typically after receiving an invoice.
   • An unpaid credit order: It refers specifically to a purchase made on credit that has not yet been settled.

Usage

• An "open account" is a common term in business, finance, and commerce. It describes a trust-based financial relationship between a seller and a reliable customer. The seller "opens" an account for the buyer, allowing them to receive goods or services now and pay later according to agreed terms (e.g., net 30 days).

Examples

• Noun:
  • The supplier offered us an open account, so we can receive the materials now and pay the invoice next month.
  • Managing our open accounts carefully is crucial for the company's cash flow.

Advanced Usage

• "To sell on open account": This phrase describes the seller's action of extending this type of credit.
  • We only sell on open account to established customers with good credit histories.
• "Open account trade": Refers to international trade transactions conducted on open account terms, which carries more risk for the exporter.
  • Open account trade is becoming more common, but it requires thorough risk assessment.

Variants and Related Words

• Open-account (adjective): Used to describe transactions or terms involving this credit method.
  • We have an open-account agreement with our main distributor.
• Account: A record of financial transactions; a contractual relationship with a bank or business.
• Credit account: A broader term similar to an open account.

Synonyms

• Credit arrangement
• Charge account (though often used for consumer retail)
• Book credit

Antonyms

• Cash on delivery (COD): Payment is required at the time of delivery.
• Prepayment: Payment is required before goods or services are provided.
• Closed account: An account that is no longer active or available for use.

Related Phrases

• Terms of payment: The specific conditions (like "net 30") under which an open account operates.
• Outstanding invoice: An invoice from an open account that is past due or not yet paid.
• Credit limit: The maximum amount of credit extended under an open account.

Noun

1. an unpaid credit order
2. credit extended by a business to a customer