The forfeiting or discount without resources is the sale of financial documents payment for the goods and services exported with a maturity of average time without recourse against the exporter. Thus, the exporting firm sells a financial institution an internationally accepted proof of payment, promissory note or bill, recognizing the right of collection resulted in a transaction of sale worldwide.
Thus, the receivables of commercial activities may be deducted by the financial institution that offers this type of financing. The term is usually forfeiting usually between six months and five years.
While large companies known worldwide not need collateral, forfeiting operations may be some form of bank guarantee, since it is a risky operation that usually requires some sort of endorsement of an entity or bank. This guarantee must be unconditional, irrevocable and transferable.
There two options of using the discount in the forfeiting market are: discount to yield (on the amount advanced) and straight discount (interest minus the nominal value of credit applicable).
Because it is a financial option that can be confused with the factoring we must recognize that the difference with respect to factoring is that letters are assigned promissory notes or bills of exchange, while the factoring invoices are assigned, plus sold document firm while factoring in the sale is optional with or without recourse.
The advantages of forfeiting there are mainly that immediate liquidity, requires no down payment, you can finance up to 100% of the operation, more guarantees and less risk of default, less administrative controls and foreign currency debt, eliminate exchange risks and non-payment, is payable immediately and more. This operation also based on the needs of the company, may be performed by the whole amount or part agreed upon in advance.
A disadvantage may be the most important interest rates are taken into operation, the search for importers to provide security or collateral for the transaction, or administrative controls and change that exist in some countries.
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