The Company hereby agrees to enter into the forfaiting transaction on a without recourse basis with Taipei Fubon Commercial Bank, Singapore Branch (the. Forfaiting is the purchase of an exporter’s receivables — the amount importers owe the exporter — at a discount by paying cash. In order to illustrate how forfaiting takes place in practice, the following is a typical When the details of the commercial contract have been agreed, but usually.
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During the course of negotiations between an exporter and an importer for the supply of goods, the importer asks agreekent credit terms. The exporter approaches a forfaiter and asks for an indication of whether the forfaiter is willing to provide this credit and how much it is likely to cost.
At this stage the forfaiter will need to know:. The forfaiter provides the exporter with an indication of the costs involved. At this stage neither party is committed in any way. When the details of the commercial contract have been agreed, but usually before it has been signed, the exporter asks the forfaiter for a commitment to purchase the debt obligations bills of exchange, promissory notes etc created under the export transaction.
The forfaiter issues a commitment which is accepted by the exporter and which is binding on both parties 1.
This commitment will contain the following points:. In return, if required, the importer obtains a guarantee agfeement his bank 4 provides the documents that the exporter requires in order to complete the forfaiting 5.
This exchange of documents is usually handled by a bank, often using a Letter of Credit, in order to minimise the risk to the exporter.
Since this payment is without recourse, the exporter has no further interest in the transaction. It is the forfaiter who collects the future payments due from the importer 8 and it is the forfaiter who runs all the risks of non-payment.
Not an ITFA member? Please send your email at info itfa. Forfaiting Example In order to illustrate how forfaiting takes place in practice, the following is a typical forfaiting transaction where the buyer and the seller of goods are located in different countries. Forffaiting this stage the forfaiter will need to know: The information required for this is the same as for an indication.
MASTER FORFAITING AGREEMENT – PDF
This commitment will contain the following points: The details of the underlying forfaiitng transaction. The nature of the debt instruments to be purchased by the forfaiter.
The discount interest rate to be applied, together with any other charges The forfaitimg that the forfaiter will require in order to be satisfied that the debt being purchased is valid and enforceable The latest date that the exporter can deliver these documents to the forfeiter 7.
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