when a transaction is conducted using an open account both the buyer and the seller agree to postpone payment until the product or service has been received 3 this approach is excellent for established long term relationships because it is founded on mutual trust payment depends on the buyer s desire to pay hence the risk to the seller is larger 
in a documentary collection the buyer and seller exchange paperwork while also paying each other using a bank 4 in contrast to letters of credit this form of e banks serve as mediators but do not guarantee payments instead they help with the document exchange and obtain money from the buyer on the seller s behalf bank guarantees are a type of assurance that a bank gives to a seller on behalf of a buyer it guarantees the seller that the bank will compensate the seller up to a certain sum in the case of a default or non performance by the buyer bank guarantees such as payment guarantees performance guarantees or bid bonds can be customized to fulfill particular needs last some entail the use of a dependable third party agent via escrow services to hold the funds until specific requirements are completed once the buyer has affirmed satisfaction with the products or services they received the money is given to the seller escrow services give both the buyer and the seller a measure of security though the transaction must be completed by one party prior to the other party following suit example of an ilocthe general services administration of the united states government provides the following example of an iloc after specific information is provided the following confirmation may be added and signed by the issuing bank note that in many cases this format is acceptable and can be used for a variety of types of transactions it may be that a specific template for an iloc can be used with specific fields input or relevant bits of data added this iloc example outlines the terms of expiration prevailing rules it may be subject to and signature blocks required by different parties 