What are the drawbacks of open account as a method of payment in international trade?

Open account payment terms expose exporters to higher risks, as they ship goods before receiving payment, potentially leading to cash flow issues if the buyer defaults or delays payment. Additionally, managing and enforcing payment can be more challenging when dealing with international buyers, especially in different legal jurisdictions. This method may also limit the exporter’s ability to secure financing, as banks often prefer more secure payment methods. Overall, while open accounts can facilitate trade, they require a high level of trust between trading partners.