Finance

Forfaiting

Forfaiting

Forfaiting is a type of export financing, where a forfaitor purchases freely-negotiable instruments at a discount from an exporter. It is most commonly used in regard to large, international sales of commodities or capital goods where the sale price exceeds $100,000. It is available for 100 percent of the payment amount, but only for relatively larger sums and for longer maturity dates although periods as short as 180 days and as long as ten years may also be considered. It is also a financial transaction involving the purchase of financial assets, but factoring involves the sale of any portion of a firm’s receivables.