MBA (Finance)III – Semester, Merchant Banking and Financial Services, Unit 3.1
Benefits to Exporter
The exporter is able to get 100% finance through a forfeiter. The exporter receives payment in full immediately after shipping (i.e. submission of documents to the forfaiter).
100 Per Cent Financing
The exporter is able to get 100% finance through a forfeiter. The
exporter receives payment in full immediately after shipping (i.e. submission
of documents to the forfaiter).
Improved Cash Flow
100% financing through forfeiter is enabling the exporter to convert
his deferred transaction into cash transaction. The exporter’s cash inflow may
increase. This helps to improve financial status and fund raising capability of
the exporter.
Reduced Administration Cost
The exporter is free from the management of the receivables by
using forfaiting.
Advance Tax Refund
The exporter can get tax refund in advance.
Risk Reduction
The risk arising from deferred payments such as interest rate risk,
currency risk, credit risk, and political risk are transferred from exporter to
the forfeiting bank.
Increased Trade Opportunity
The exporter can enlarge his business in the world market due to
extending the credit limit. Forfeiting encourages more credit transactions.
