Explain the concept of "Forfaiting". Describe the mechanism of Forfaiting services and discuss its benefits.
Forfaiting is a form of international trade finance in which exporters sell their medium and long-term receivables to a forfaiter at a discount in exchange for immediate cash payment. This financial service eliminates the risks associated with deferred payments and allows exporters to manage their cash flows more effectively. Forfaiting is typically used in export transactions where the payment period ranges from 180 days to seven years, and it is especially common in capital goods, large machinery, and infrastructure projects.
The key feature of forfaiting is that it is a "non-recourse" financing method. This means that once the receivables are sold to the forfaiter, the exporter bears no further credit risk or liability for default by the importer. The forfaiter assumes all ___ ____ ____ _______ _______ ___ _____ _______.
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