Forfaiting is the discounting of trade receivables on a without-recourse basis.
It is a highly effective finance tool which allows an Exporter / Seller to grant attractive credit terms to his buyers without tying up cash flow or assuming the potential risks of late payment or default. It also protects him against adverse movements in interest and / or currency rates during the credit period.
Forfaiting may be used to finance a wide range of goods and services including commodities, technology, consumer and capital equipment and even turn-key projects. Tenors typically range from six months up to seven years subject to the underlying transaction.
Generally, the debt owed by the buyer to the seller should be evidenced by Promissory Notes, Bills of Exchange, Letters of Credit, Payment Guarantees or even Open Book Receivables. The debt will usually require a guarantee or aval from an acceptable bank, although some corporate or government buyers may be considered without additional bank security.
|When should you contact us?
London Forfaiting Company (LFC) is the fully-owned FIMBank subsidiary handling all forfaiting business for the Group. If you are an exporter, our extensive experience can be of particular help when you are formulating your finance proposal. At that stage, we can advise on the availability and costs of finance, credit periods, types of documentation, requirement for bank guarantees etc.
For further details, call one of our LFC offices or send us an email.