Forfaiting is the acquisition of debt obligations
Every day in our everyday life there is everythingmore words borrowed from foreign languages. The meaning of some is clear and understandable. Such terms quickly take root and become part of everyday speech. For example: kulniy, laptop, player, mobile and others. However, there are a number of specific terms, the nature of origin and further use of which can not be understood by anyone. The concept of forfeiting also belongs to the category of such words. What is it? In simple words, only a person familiar with economic fundamentals can explain the meaning of a long foreign term. Support in this matter will also be provided by paper carriers, which reveal the structure and application of this concept. Often people confuse or link factoring and forfeiting. These are two different terms that practically do not touch anything. The last concept will be discussed in this article.
Nature of origin and interpretation
Forfaiting is an economic term. The native land of this word is England. It was there that such a concept as forfeit, which in translation means "penalty", "fine", "payment", "lose the right". An even earlier form of this word is the French counterpart a forfai, or "entirely".
Currently, there are several optionsdeciphering the term. Forfaiting, for example, is a financial transaction in which an agent, or, as it is called on the market, a forfaiter acquires a commercial nature of the buyer / borrower / importer before the seller / lender / exporter. For example, the organization A must return 100 thousand conventional monetary units for the goods delivered to it by company B. At the same time, there is no possibility to repay the debt. Then a third person can enter the situation, which will repay the loan of organization A. At the same time, company B receives its money. Organization A - postponement for payment of a loan. The agent is not only spent money, but also some percentage of future profits. The banking structure most often acts as an agent.
Thus, forfaiting is a specificThe form of credit, the maturity of which occurs after a certain period. Typically, as a time gap takes several years. The subject of lending is trade transactions or services. The main distinguishing feature of this operation is the existence of an item on liability for risks. Forfaiter can buy promissory notes "without recourse". That is, the borrowing bank, when acquiring documents, has no right to make claims to their previous holder. As a security here, as a rule, bills of exchange are used.
Features and implementation scheme
Forfaiting - this is quite common onWest way of commercial lending. Especially popular in the UK and Germany. What are the features of the transaction? Let's see. First, the initiator of the forfeiting operation can be both the seller and the buyer. Or by common agreement. The scheme of the process is as follows:
- The agent bank sets a number of financial conditions for the buyer.
- The latter provides the forfaiter with securities that fully satisfy the requirements put forward.
- Then the bank redeems the debt from the seller.
Documents (in their quality are bills anddrafts) provided to the agent forfeiter are proof of receipt of the goods, and also indicate the assignment of the loan and the right to revenue, which is planned to be received from the sale of products in the future.
Currently, the so-calledinternational forfeiting. The main advantage of it is the possibility of purchasing goods for cash at the moment instead of the profit that will be received in the future. The plus is also a fixed interest rate. It allows the borrower to promptly and conveniently plan the cost of the loan. In addition, the processing of documents is a very simple and quick procedure.
On the territory of the Russian Federation, the termConducting forfeiting deals often exceeds the European period of several days. The reason for this is the need for specially issued permits from the Central Bank. That, in turn, should receive a request for approval of the operation. Consideration of this application takes about a month.
Unlike bank loans, transactionsForfeiting is strictly confidential. In doing so, they have their drawbacks. For example, finding a guarantor for the bank. In addition, the interest rate for such transactions is much higher than for other types of lending.
When making forfeiting deals, you should pay special attention to such items as:
- The need for a mandatory and timely warning to the seller of repayment of the existing debt in installments.
- The bank should be the guarantor of a debt repayment if the buyer is not a state representative or an international company.