Navigating the complex landscape of international trade
can be challenging, especially when it comes to managing credit risks and ensuring prompt payments. Here, forfaiting emerges as an important tool for exporters seeking to put in place a secure financial mechanism. In essence, forfaiting is a form of trade finance that allows exporters to successfully mitigate risks, maintain cash flow, and facilitate international trade with confidence. It not only ensures that sellers receive immediate cash by selling their receivables at a discount but also shifts the credit risk to the forfaiting agency.
Forfaiting is an essential tool for exporters navigating international trade — it ensures timely payments and minimizes credit risks. In this blog, let’s understand what forfaiting is, the various types of forfaiting, its characteristics, and the advantages of forfaiting.