Which method of payment bills the buyer who is supposed to pay at a specified time?

An open account is a payment method where goods are shipped and delivered before payment is due, allowing the buyer to pay at a specified later time, usually according to agreed-upon payment terms. This arrangement is common in international trade because it facilitates smooth transactions, particularly between established trading partners with a level of trust. The seller extends credit to the buyer, making it easier for the buyer to manage cash flow and plan for the payment.

In contrast, cash in advance requires the buyer to pay before goods are shipped, which minimizes risk for the seller but can be less attractive to buyers. A letter of credit also provides security for both parties; however, it involves banks and specified conditions for payment that may not directly align with the concept of a specified later payment directly from the buyer. Accounts receivable simply refer to amounts owed to the seller by buyers who have already received goods or services, without specifying a framework for payment timing like the open account does.