90% of foreign trade people don't know about the "Account Period Magician"

"Mr. Zhang has been very worried recently - the Nordic-style office desks produced by his furniture factory were very popular at the overseas exhibition, but the customer required a 30-day account period, while the raw material suppliers required cash settlement. Facing a tight capital chain, he heard the term 'Export OA Agency' for the first time." Such a scene is being played out in countless small and medium-sized export enterprises. This article will uncover this little-known but crucial financial tool in cross-border trade and see how it becomes the "airbag" on the road for enterprises to go global.

Open Account (), as an international trade settlement method with a current proportion of more than 80%, means that the exporter needs to ship goods first and then receive payment. And export OA agency is a financial service designed for this scenario: professional institutions advance 80%-90% of the payment, and settle the final payment after the overseas buyer makes the payment, and also bear the buyer's credit risk.

• Difference from Traditional Letters of Credit: No need for bank guarantees, and the procedures are simplified by more than 60%
• Difference from Export Factoring: Focuses more on the credit evaluation of the buyer rather than the management of accounts receivable

According to the 2023 cross-border e-commerce research, the average collection period of enterprises using OA agency is shortened to 15 days, and the bad debt rate is lower than 0.5%. Ms. Li, a home exports merchant, shared: "Through the OA service of Zhongshitong, the order volume from our Brazilian customers has increased three times, because they have received 90-day account period support."

Three major market trends are boosting the explosive demand:

• Buyers in emerging markets generally require a 60-120-day account period
• The trade volume in Southeast Asia has surged after the entry into force of the RCEP
• Cross-border e-commerce B2B orders are developing towards small and fragmented amounts

Not all OA agencies are suitable for your business. Please pay attention to these core parameters:

• Coverage: Whether it can cover your target countries (especially high-risk areas such as Africa/Latin America)
• Rate Structure: Usually 0.8%-1.5% of the order amount per month. Beware of hidden fees
• Claim Conditions: 100% claim or risk sharing in proportion
• Speed of Fund Arrival: High-quality service providers can release funds within 24 hours after the transfer of goods rights
• Value-added Services: Whether it includes supporting services such as buyer credit investigation and exchange rate hedging

After communicating with dozens of exporters, we found these common misunderstandings:

Misconception 1: "Only Large Amounts Are Needed" - In fact, orders of less than $50,000 account for 67%, which is the "essential need area" for small and medium-sized enterprises.

Misconception 2: "It Will Leak Customer Information" - Regular institutions will sign a confidentiality agreement, and no terminal buyer information is required in the operation.

Misconception 3: "It's Not As Good As Buying Insurance Oneself" - Credit insurance only insures against risks, while OA agency simultaneously solves the problem of capital turnover.

If you are experiencing:

• Being forced to give up orders due to account period issues
• Long-term occupation of cash flow by overseas customers
• Doubting the credit of buyers in emerging markets