Forfaiting is the without recourse finance of international trade receivables,based on Letters of Credit, Letters of Guarantee, Bills of Exchange and Promissory Note. Basically any goods can be financed, from commodities to chemicals to motorcycles to machinery (as examples).
CTS is the mediator between the exporter / exporter's bank and various other banks / investors worldwide. CTS facilitates the entire transaction from obtaining a price quotation and assisting in documentation up to communication with the buyer. CTS is not financially involved in any deal and will receive a fee for its advisory services.
At any given time during the transaction. However, the earlier, the better,as CTS can then advise on bank and country risk.
CTS will contact buyers of the exporter's receivables. Once the transaction is confirmed, the buyer will send a written confirmation which is a legally binding contract.
Usually CTS will reply within 24 hours after receiving the details on any potential transaction.
Forfaiting allows for 100% financing of the receivables face value.
Forfaiting is 100% without recourse (unless deliberate fraud is involved),and as such,the exporter is not responsible for repayment at maturity.
The exporter will get paid after the Letter of Credit has been accepted by the Issuing Bank and all documentary requirements of the buyer have been fulfilled.In usual cases that means about 3 - 4 weeks after shipment has taken place.
The price will very much depend on the underlying bank and country risk, as well as on amount and lifetime. Please do check with us on a case by case basis.
All the risk associated with the payment of such transaction at maturity, i.e. bank risk, country risk, transfer risk and exchange rate risk will be taken by the buyer of such transaction. The exporter will receive cash, enabling him to further use such money and to improve his balance sheet.
Usually around USD 100,000.00 and at least 60 days, otherwise the cost is usually too high. However, smaller deals can be considered case by case
It depends on who the buyer is of a transaction. Thelowest minimum fee is about Libor + USD 500.00
Depends on who the guarantor or issuer is, but basically yes
Our clients will deal directly with a bank, we just find a buying bank for the receivables for them. All documents and contracts to be signed directly with the buying bank.
It depends on who the final buying bank of the receivables is, many buyers dont mind, but some cant accept it.
No, as both are payable at sight, there is no financing period
It depends on which corporate is the guarantor / obligor. Usually, the company should be a listed company, so that financials are easily obtaineable, or a subsidiary of a state owned company, or a large state owned company in order to make it feasible.
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