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What is forfaiting

Forfaiting is a form of international financing which involves the discount of future payment obligations on a without recourse basis.

Forfaiting is a flexible discounting technique that can be tailored to the needs of a wide range of trade related receivables such as goods and services including commodities, technology, consumer and capital equipment.

Although discounted receivables typically have maturities over medium terms of 3 to 5 years, they can be as short as 6 months or as long as 10 years.


Main features

  • Financing without recourse of the deferred payment;
  • Financing on a fixed interest rate basis;
  • The debt is usually represented by promissory notes, bills of exchange,  letters of credit or letters of guarantee;
  • Normally the drafts (Promissory notes or bills of exchange) are guaranteed by aval or by a separated letter of guarantee issued by the Bank of the debtor/Importer;
  • Transaction values can range from EUR 100.000 to EUR 200 million;
  • Debts instruments are typically denominated in Euro, US Dollars, Swiss Franc or British Pound.


Why forfaiting

  • Enhances Competitive Advantage:
    • Enables exporters of goods to make their products more attractive by offering credit terms to their customers;
    • Financing cost of the transaction can be quickly quantified.
  • Eliminates Risk:
    • Removes political, transfer and commercial risk;
    • Protects against risk of interest rate increase and exchange rate fluctuation.
  • Improves Cash Flow:
    • Provides Financing for 100% of deferred amount;
    • Enables exporters to receive cash payment while offering credit terms to their clients;
    • Acts as additional source of funding and hence does not have an impact on the Exporter’s borrowing limits.
  • Increases Speed and Simplicity of Transactions:
    • Financing commitments can be issued quickly;
    • Documentation is typically concise and straightforward;
    • Relieves the Exporter of administration and collection burden.


Our services

We assist from initial negotiation of a contract to final financial settlement for discount without recourse transactions with short, medium and long payment terms, represented by promissory note/bill of exchange, letter of credit and letter of guarantee.