London Forfaiting

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How can we be certain that financing is in place before we sign the contract?

If you are reasonably confident of being awarded the contract, and you want to fix the discounting costs, London Forfaiting may be in a position to grant you an option. The option is a commitment given for a determined period of time. It fixes all the discounting conditions and allows you to sign the commercial contract with the certainty that you will be able to sell the debt instruments, without recourse, to London Forfaiting, after you have completed delivery of the goods or service. If the contract is awarded to you before the expiration of the option, the option automatically turns into a firm forfaiting commitment.

Why does my client need to obtain a bank guarantee, why don't they just borrow the money locally?

In many emerging markets, companies and banks alike may have significant difficulty in borrowing medium term fixed rate money. As a result, even if the Importer could obtain a fixed rate medium term loan, the interest rate is likely to be prohibitively high. The local bank, because of its relationship with the Importer plays a key role by issuing a guarantee, thereby allowing its customer to access foreign sources of funding.

What information does London Forfaiting need to provide an accurate quotation for our potential international sale?

To provide you with an indicative quotation, London Forfaiting will ideally require the following information: Amount, Currency, Tenor, Country, Obligor, Guarantor, Underlying transaction, Shipment schedule. It goes without saying that our quotation will only be as detailed and precise as the information that you provide.

Our type of business is such that we cannot afford to wait two or three months for a quotation on a specific transaction! How long does it generally take London Forfaiting to indicate interest in a transaction?

London Forfaiting understands that your commercial negotiations are often very fast moving, and as such, we can usually provide an immediate indication for markets where we are active.

Currently, London Forfaiting has the ability to provide financing in over 100 countries world-wide. However, because market conditions can be highly volatile, the list of countries where we are active will change in accordance with economic and political developments world-wide.

How much down payment does the Importer need to make for London Forfaiting to finance the contract?

No down payment is needed as London Forfaiting can refinance up to 100% of the value of the commercial contract.

A significant portion of our finished product is manufactured in other countries. Does this affect the ability of London Forfaiting to finance the transaction?

No. As long as the transaction does not violate any government export or import regulations, 100% of the transaction could qualify for financing. In most countries, local costs may also be financed.

What happens if the Importer does not pay it's debt to London Forfaiting at maturity?

London Forfaiting purchases the debt without recourse, and as such, you are not responsible for repayment at maturity.

Our company has a relatively long manufacturing period. How long prior to the availability of the documents can London Forfaiting commit to purchase the receivables? Is our company covered for fluctuations in interest rates during this period?

Depending on the specific transaction, London Forfaiting may be in a position to commit to purchase receivables up to 18 months prior to delivery. If interest rate risk is of concern to your company, London Forfaiting may be able to commit to discount the debt at a fixed rate, which will protect you from adverse movements in interest rates during the manufacturing and delivery periods.

When do we get paid?

It is in everyone's interest to accelerate the payment as much as possible. Clearly London Forfaiting has to go through a checking process, but with your assistance and the cooperation of your client and their bank, in most cases payments are made within a couple of weeks of presentation of complete documentation.

Our sales force has informed us that our competitors are offering medium term financing at below market rates. How is this possible?

They are probably using forfaiting already. Unlike most government supported credits, forfaiting allows suppliers to subsidize the interest rate charged to their Buyers and therefore it is highly likely that your competitor is already using forfaiting to support the supplier credit they are offering the Buyer.

What are the origins of Forfaiting

The origins of forfaiting date back to the middle-ages, but the technique evolved into its modern state in the 1960's, as the centrally planned economies of Eastern Europe needed to finance their imports of capital equipment from Western Europe. In those days, forfaiting was seen as a highly specialized technique whose main purpose was fixed rate medium term financing of cross border sales of capital equipment without recourse to the Exportera