What defines an open account in international payments?

An open account in international payments is characterized by the practice where goods are shipped and delivered to the buyer before payment is received. This arrangement is advantageous for the buyer, as it allows for the use of the merchandise before the financial obligation needs to be settled. It is frequently employed in scenarios where the buyer and seller have established a mutual level of trust, mitigating the risks associated with this type of transaction.

The other choices reflect different payment arrangements. For instance, making payments in advance or utilizing letters of credit are methods that provide more security for the seller, while the condition regarding the non-return of goods after payment does not specifically define the payment method itself. Instead, it describes the nature of the transaction after payment has been made, which is not relevant to the definition of an open account.