Reel | What is forfaiting? Featuring ITFA’s Deputy Chair Lorna Pillow - Trade Treasury Payments

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❓What is forfaiting? ITFA’s Deputy Chair Lorna Pillow spoke to TTP’s Deepesh Patel during ITFA Week London, which Trade Treasury Payments (TTP) were delighted to be media partners at!

📚Forfaiting is a method of trade finance whereby the forfaiter purchases, on a without recourse basis, debt obligations arising from the supply of goods and/​​or services.

The Standard Definition for Techniques of Supply Chain Finance defines forfaiting as “a form of Receivables Purchase. It is without recourse purchase of future payment obligations, represented by negotiable or transferable financial instruments; at a discount or at face value in return for a financing charge.”

In a forfaiting transaction, the exporter agrees to assign its rights to claim for payment of goods or services delivered to an importer under a contract of sale, in return for a cash pay­ment from a bank or finance provider.

In exchange for the payment, the forfaiter takes over the exporter’s debt instruments and assumes the full risk of payment by the importer. The exporter is thereby freed from any financial risk in the transaction and is liable only for the quality and reliability of the goods and/​​or services provided.

Source: ICC Academy