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Forfaiting
Product Overview
Forfaiting is a "Non-Recourse Discounting" service that involves the exporter surrendering or relinquishing the rights to claim for payment on goods and services delivered to the buyer (the Forfaiter), in return for discounted cash payment. Most forfaiting transactions involve the bank purchasing trade bills at a discount, with bills of exchange or promissory notes accepted or guaranteed by a bank.
Benefits
- Elimination of all political, credit and commercial risk and non-payment risk associate with the trade
- No further involvement in the collection of export bill once purchased by the bank (Forfaiter) and therefore, reduced administration cost for the customer
- Improvement in financial statements by eliminating contingent liabilities and improved cash flow
- Quick response to any enquiry by trade experts
- Simple documentation requirements
Product Features
- Upon receipt of acceptance notice by the issuing bank, the export bill discounting is on a "non-recourse" basis, assuring the exporter that the funds advanced by the bank are "cleared"
- All usance bills under DC's issued by acceptable issuing banks and D/A bills supported by bank aval or guarantee are eligible for forfaiting
