Forfaiting

In today's highly competitive business environment, exporters are often faced with the dilemma of accepting requests for credit terms from buyers. Turning down such request runs the risk of losing the business; whilst accepting exposes the exporter to the risk of non-payment at maturity and as well as potential cash flow concerns. While traditional bill discounting may alleviate the liquidity pressure, it however does not address the underlying importing country's commercial, credit and political risks.

Forfaiting is designed to assume the above risks. It is essentially a form of bill discounting that is provided on a without recourse basis to the exporter in the event of non-payment at maturity. Forfaiting enables exporters to convert a credit sale into a cash sale.

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