FORFEITING

Forfait is derived from French word A Forfeit which means surrender of fights.
Forfeiting is a mechanism by which the right for export receivables of an exporter
(Client) is purchased by a Financial Intermediary (Forfeiter) without recourse to him.
It is different from International Factoring in as much as it deals with receivables relating
to deferred payment exports, while Factoring deals with short term receivables.
Exporter under Forfeiting surrenders his right for claiming payment for services
rendered or goods supplied to Importer in favor of Forfeiter.
Bank (Forfeiter) assumes default risk possessed by the Importer.
Credit Sale gets converted as Cash Sale.
Forfeiting is arrangement without recourse to the Exporter (seller)
Operated on fixed rate basis (discount)
Finance available up to 100% of value (unlike in Factoring)
Introduced in the country in 1992.
It is a highly flexible technique that allows an Exporter to grant attractive credit terms to
foreign Buyers, without tying up cash flow or assuming the risks of possible late
payment or default.
Simultaneously, the Exporter is fully protected against interest and/or currency rates
moving unfavourably during the credit period Forfaiting is a highly effective sales tool,
which simultaneously improves cash-flow and eliminates risk.