The purpose of these specific questions is to determine the price for the liquidation of the receivable, and how much flexibility the exporter and the forfaiter have in crafting a sales and financing proposal that will meet the needs of the prospective buyer.
It is critical that the forfaiter be involved in this preliminary process, before any pricing discussions are held between the exporter and buyer.
Once a forfaiter has determined a prospective transaction to be acceptable, he issues an indication of interest detailing the price for the specific receivable; given the tenor, amount, credit and country risks.
As the contract negotiations take shape, the exporter should keep the forfaiter well informed of changes, delays, or any other events that may impact the financial modeling.
This will require the upfront payment to a forfaiter of a non-refundable option fee.
A forfaiter can "tailor-make" a deal to create the right size of transaction with appealing maturities to satisfy the end investor.
There are many risks associated with "cross-border trade transactions." Those risks assumed by a forfaiter include: country/political risk, interest rate risk, foreign currency risk, documentary risk, commercial risk (which may be corporate, bank or even sovereign risk) and collection risk.
Once an indication is provided by a forfaiter, the forfaiter can additionally quantify the actual amount of the financing based upon prevailing market interest rates.
In exchange for the payment, the forfaiter takes on the responsibility for claiming the debt of the importer.
By talking to a forfaiter early, an exporter might be able to include some of the financing costs in its price.
The primary market consists of forfaiters who deal directly with exporters.