What is Open Account?

An open account is an arrangement between a business and a customer, where the customer can buy goods and services on a deferred payment basis. The customer then pays the business at a later date. This arrangement is typically capped by the maximum amount of credit that the organization is willing to extend to the customer. When purchases are made under this arrangement, the seller does not charge interest to the buyer.

The open account concept also refers to any account that has a non-zero balance.