For importers and exporters who know and trust each other and are comfortable with the commercial and country risks associated with the transaction.
The Open Account solution is most beneficial to the importer (the buyer) and should be used where the standing of the buyer and the buyer's country are undoubted.
Payment of Trade & Working Capital Division transactions can be accomplished on an Open Account basis.
How it works
The seller loses control of the goods as soon as they are dispatched, because they have to trust that the buyer will remit the funds.
This method of payment favours the buyer, as they only have to pay for the goods after their arrival at their destination. The seller, therefore, runs the risk of shipping the goods and never receiving payment. For this reason, Open Account should only be used when the seller trusts the buyer and is happy with the country risk of the buyer.
Open Account payments may be done from foreign currency accounts or via BWP current accounts after an exchange rate is agreed upon.
The buyer, due to financial constraints or deliberate default, may not effect payment.
The seller loses control over the goods, as all documents of title are sent directly to the buyer.
The buyer may be restrained from paying due to circumstances beyond their control, e.g. exchange control regulations or other laws introduced in the buyer's country.
A bank or status report can be obtained to ascertain the financial standing, reliability and integrity of the buyer. If transactions are ongoing, it is wise for the seller to update reports on a regular basis.
The seller should be confident that the buyer's country would not impose regulations that will prevent the buyer from making payment. A report on the buyer's country could be obtained to assist the seller in this regard.
Another way of mitigating the risk associated with open account payments is to use documentary letters of credit or documentary collections (see sections on Documentary Collections and Letter of Credit)
Contact your nearest branch and request them to do a SWIFT transfer or issue you with a draft (depending on the requirements of the seller). SWIFT transfers are easier and quicker than drafts.
You will need to supply your bank with details of the beneficiary, as well as their full banking details (account number and name and branch of their bank). You also need to stipulate the exact amount and currency required.
