Open account payment — paying after delivery — exposes exporters to maximum risk. For Iran-India trade, especially new relationships, open account is dangerous. Here's why and what to use instead.
Open account payment — where the exporter ships the goods and the buyer pays after delivery — is the most buyer-friendly payment method. It is also the most dangerous for exporters, and a clear red flag in new relationships. This article explains why open account is dangerous for Iran-India trade, especially for first orders, and what to use instead.
Why buy from India
Iranian buyers import agro, packaging, textiles, chemicals and pharma inputs from India. Whatever the product, the payment method must balance exporter and buyer risk. Open account almost never does — it places the entire risk on the exporter.
Common challenges for Iranian importers
- Some buyers request open account on first orders — reputable exporters refuse.
- Some suppliers offer open account to win orders — this is often a sign of fraud.
- Open account terms are often confused with usance LC (which is bank-backed).
- Buyers may not understand why exporters insist on advance or LC.
How Blueroute Exim handles this
We do NOT offer open account for new buyers. Our default structures are:
- 50% advance + 50% before BL release.
- LC at sight (especially for larger or first orders).
- Advance TT for very small first orders.
- Rupee payment through permitted Iranian bank accounts.
Open account is only considered for established buyers with a multi-year clean payment history and ECGC credit insurance cover.
Why open account is dangerous
### 1. Exporter bears maximum risk - Goods are shipped with no payment security. - No bank undertaking, no document control after shipment. - If the buyer defaults, the exporter has no easy recourse.
### 2. International litigation is impractical - Suing a buyer in another country is expensive and slow. - Legal costs often exceed the value of the consignment. - Enforcement of judgments across Iran-India is complex.
### 3. Buyer risk in fraudulent offers - If an unknown supplier offers open account on a first order, it is often a scam. - The supplier may never ship — they collect the buyer's order registration and bank details. - The "open account" offer is bait; there is no real shipment.
### 4. No export incentive eligibility - Exporters using open account must still realise proceeds within RBI timelines. - If the buyer defaults, the exporter loses both the goods and the export incentive (RoDTEP, RoSCTL, Drawback).
### 5. Insurance complications - ECGC cover is possible but adds cost. - Without ECGC, the exporter is fully exposed.
Step-by-step: what to use instead
### For a new buyer, first order - Use **LC at sight** — bank undertaking protects both parties. - Or use **50% advance + 50% before BL release** — balanced structure.
### For a new buyer, small first order - Use **advance TT** — simple, low cost. - Or **50% + 50%** if the supplier accepts partial advance.
### For an established buyer, regular orders - Continue with **50% + 50%** or **LC at sight**. - Consider **usance LC** if the buyer needs credit (exporter can discount). - Open account only with ECGC cover.
Required documents
Independent of the payment method, the underlying trade documents are:
- Proforma Invoice.
- Commercial invoice.
- Packing list.
- Bill of Lading.
- Certificate of Origin.
- Certificate of Analysis (where applicable).
- Insurance certificate (under CIF).
Payment — bank compliant only
- Advance TT.
- 50% advance + 50% before BL release.
- LC at sight.
- Rupee payment through permitted channels.
No crypto. No hawala. No open account for new buyers.
Quality assurance
Every shipment — independent of payment method — goes through:
- Supplier verification.
- Sample approval.
- Pre-shipment inspection.
- Lab testing for food, pharma, chemicals.
- Stuffing photographs.
Why choose Blueroute Exim
- Bank-compliant payment methods only — no open account for new buyers.
- Iran-ready Proforma Invoices.
- Independent PSI on every shipment.
- Transparent pricing and documentation.
- Based in Surat, Gujarat — close to Mundra and Nhava Sheva.
- Business hours: Monday to Friday, 10:00 AM – 5:30 PM IST.
- Contact: +91 93132 01754, info@bluerouteexim.in.
Key Takeaways
- Open account places the entire risk on the exporter.
- Reputable exporters never offer open account on first orders.
- If a new supplier offers open account, it is likely a scam.
- For new buyers, use LC at sight or 50% advance + 50% before BL release.
- Open account is only for long-established relationships with ECGC cover.
If a supplier offers you open account on a first order, walk away. Contact Blueroute Exim at info@bluerouteexim.in or +91 93132 01754 for safe, bank-compliant sourcing.
Frequently Asked Questions
What is open account payment?
Open account means the exporter ships the goods and the buyer pays after delivery — typically 30, 60 or 90 days after arrival. The exporter has no bank undertaking and no document control.
Why is open account dangerous for exporters?
The exporter ships goods without any payment security. If the buyer defaults, the exporter has no easy recourse — international litigation is expensive and slow.
Why is open account dangerous for buyers too?
Reputable exporters do not offer open account to new buyers. If a supplier offers open account on a first order, it is often a sign of fraud — the goods may never ship.
When can open account be used?
Only between long-established trading partners with a clean, multi-year payment history — and ideally with credit insurance (ECGC or similar). It is never appropriate for new relationships.
What should I use instead?
For new relationships: 50% advance + 50% before BL release, or LC at sight. For established relationships with credit insurance: open account may be considered.