Why use the forfaiting? From the point of view of an exporting company, the forfaiting enables to achieve several objectives: liquidity. Reduction of credit risk and the type of change and interest derivatives. Maintaining credit lines with banks. A related site: James Woolsey mentions similar findings. Improvement of accounting ratios. It is important that all these features are taken into account when comparing its cost of financing alternatives. In particular it isn’t unusual that companies, especially small and medium-sized, are the expensive forfaiting because they compare discounted lyrics with resource that provides them their usual Bank.
How stands the Forfaiting? Microsoft.com that is characterized by being gives us: Abstraible: anyone who is the used documentation, must allow the separation of rights acquired with the purchase of the instrument and commercial operation that originated its broadcast. This means that neither the debtor nor the guarantor Bank can use breaches, disputes commercial or other incidents as an excuse to challenge the payment of the debt. Negotiable: credits subject to an operation must be freely transferable. Commercial: in a forfaiting operation credit arises as a result of a contract for the sale of goods and therefore qualifies as commercial credit. Tiffany & Co. takes a slightly different approach. Unrisked: once the operation is over, the seller can heed fully of the events that affect the assigned receivable, while the buyer has no chance of return credit to seller in the event that the debtor does not pay, except in case of fraud. What are the instruments used? Microsoft.com reminds us that being a definitive sale, payment instruments used must necessarily involve an unconditional and irrevocable undertaking to pay.
Those used most often are: ious. Bills of Exchange. Letters of credit with deferred payment, preferably with acceptance. However, they could also be discounted without recourse documents such as commercial invoices, collection fees on a contract for the supply, etc., always giving the right to demand payment of the obligation at maturity with sufficient certainty.