forfaiting


Also found in: Dictionary, Wikipedia.

Forfaiting

A form of factoring that involves selling large, medium to long-term receivables to buyers (forfaiters) who are willing and able to bear the costs and risks of credit and collections.

Forfaiting

In international trade, the selling of an exporter's receivables for a particular transaction. It is similar to factoring except in scope. While a company sells all of its accounts receivable in factoring, an exporter only sells one receivable for one, perhaps high risk, transaction. In forfaiting, the buyer is known as a forfaiter, and assumes all the risks associated with collecting the receivables. Generally, the exporter forfaits the receivable at a discount. This improves cash flow but reduces income.

forfaiting

the provision of finance by one firm (the forfaiter) to another firm (the client) by purchasing goods the client has pre-sold to a customer but for which he has not yet been paid. The forfaiter (which often is a subsidiary of a commercial bank or a specialist firm) buys the client's goods at a discounted cash price, thus releasing ready money for the client to use to finance his WORKING CAPITAL requirements. The forfaiter then arranges to collect the payment when due from the customer to whom the goods have been sold, thus also saving the client the paperwork involved.

Forfaiting extends to both domestic and export sales. It can be especially useful in the latter context in the case of expensive capital equipment involving long delivery dates, and where there are possible complications arising from dealing with relatively unknown customers, exchange rate fluctuations, etc. See EXPORTING.

forfaiting

the provision of finance by one firm (the forfaiter) to another firm (the client) by purchasing goods that the client has presold to a customer but for which he has not yet been paid. The forfaiter (which often is a subsidiary of a commercial bank or a specialist firm) buys the client's goods at a discounted cash price, thus releasing ready money for the client to use to finance his WORKING CAPITAL requirements. The forfaiter then arranges to collect the payment when due from the customer to whom the goods have been sold, thus also saving the client the paperwork involved.
References in periodicals archive ?
The training, which consisted of a two-day four-session seminar on 10 and 11 November, followed by a two-day workshop on Receivables financing: factoring, forfaiting and supply chain financing , was organized in partnership with the Central Bank of Kenya.
With the acquisition of a Western European bank, we will be able to offer our customers and suppliers a wider range of structured finance solutions, including factoring, inventory financing, forfaiting, marketing and other types of risk management and financing solutions.
Forfaiting is a financial transaction involving the purchase of receivables from exporters by a forfaiter.
Standard Bank has been named Best Trade Bank in Africa in the annual Excellence Awards of Trade & Forfaiting Review (TFR).
Dubai: Mashreq, one of the UAE's leading financial institutions, was recently recognised at the TFR Excellence Awards 2012 from London-based Trade & Forfaiting Review (TFR) Magazine.
Summary: Mashreq was recently recognised at the TFR Excellence Awards 2012 from London-based Trade & Forfaiting Review (TFR) Magazine.
The topics of discussion during the Conference are anti-money laundering regulatory initiatives and forfaiting with their respective task forces.
Computed by Euromoney magazine, the categories include political risk, economic performance, debt indicators, debt in default or rescheduled, credit ratings, access to bank finance, access to short-term finance, access to capital markets, and forfaiting (purchasing credit instruments on a non-recourse basis in foreign exchange transactions).
The Royal Bank of Scotland ("RBS") has announced a major expansion of its International Banking Services team based out of Birmingham and servicing the Midlands following the bank picking up the award of "Best Short-Term Trade Finance Bank" in the 2006 Trade Forfaiting Review Awards.
Sometimes banks assist with forfaiting, the purchasing of an exporter's receivables at a discount by paying cash.
AGMs: F&C Income Growth, London Forfaiting, Vitesse Media.
In 1999, the CDO market expanded with the inclusion of project finance loans and bonds, forfaiting trade receivables, private placements, and real estate asset-backed securities in CDOs.