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forfeiting is particularly suitable for operations with long delivery and payment (up to 3 years). 'Why Use forfeiting? From the perspective of an exporting firm, forfeiting allows to achieve several objectives: Liquidity. Reduced risks of credit and exchange rate derivatives and interest. Maintenance of credit lines with banks. Improved accounting ratios. It is important to take into account all these features when you compare its cost with that of other financing alternatives.

In particular it is not unusual for companies, especially small and medium size, are forfeiting expensive because it compares with the discounting of bills with recourse offered by their bank. How do we characterize the Forfaiting? Microsoft.com gives us that is characterized by: Abstraible: whatever the materials used, it must permit the separation between the rights acquired with the purchase of the instrument and commercial operation which has led to their release. This means that neither the debtor nor the guarantor bank can use the defaults, commercial disputes or other incident as an excuse to challenge the debt. Negotiate: the receivables to an operation should be freely transferable. Commercial: In an operation of forfeiting the claim arises from a contract of sale of goods and therefore qualifies as trade credit. No action: After the transaction, the seller may totally ignore the events that affect the assignor, while the buyer has no chance of returning the credit to the seller in case the debtor does not pay, except of fraud. What are the instruments used? microsoft.com reminds us that the case of a final sale, payment instruments used must necessarily involve an unconditional and irrevocable promise to pay.

Those used most often are: Notes. Bills of exchange. Letters of credit with deferred payment, preferably with acceptance. However, it also could be non-recourse discounting documents as commercial invoices, receivables on a supply contract, etc.., always providing sufficient certainty the right to demand payment of the obligation at maturity. Both the notes and bills of exchange are transferred by endorsement, which in its simplest form is the beneficiary's signature on the back of the title thereof. The endorsement without recourse (without recourse lending) conveys the right to receive payment of the bill, but not to resort to the seller in case of default.

What is required for a consolidation ara it ideal for forfeiting? It needs to be: Unconditional, Irrevocable , Transferable. It is important that the text of the document leaves no doubt on the validity of the obligation and the security can be invoked from a legal standpoint. The most widely used form of reinforcement in the forfeiting market is the guarantee. An alternative is to guarantee the bank guarantee, issued in a separate document on the notes or letters. Each bank usually has its own format, and text can be from a few lines to several pages which are considered in detail various legal aspects. What are the advantages for the customer? You can make sale eliminates having secured recovery risk in the balance sheet and not declared to the CIRBE Covering Risk can be used in manufacturing operations or unique made to order can be used exclusively with the commercial risk as well is a very interesting product for companies with equipment and facilities standard money is received at the time that executives have the documents recovered when delivered well, can offer up to two years of Final payment deadline forfeiting may be of interest both in terms of availability and cost. Forfeiting some flexibility to determine when to enter the market. An exporter may decide to keep the credit on their books for a while or sell only part of the credit, such as the forfeiting market lends itself to creating products tailored to the measure. So do not be afraid to propose to market different operations.