• Forfaiting is a type of financing that helps exporters get immediate cash by selling their receivables at a discount through a third party.

  • The payment amount is usually guaranteed by an intermediary, such as a bank, which is the forfaiter.
  • Forfaiting also protects against credit risk, transfer risk, and exchange rate or interest rate risks.
  • The receivable is converted into a debt instrument, such as an unconditional bill of exchange or promissory note, which can then be sold on the secondary market.
  • Although these debt instruments may have different maturities, most maturities are between one and three years from the date of sale.