INTESA SODITIC
A Bankers Guide to Forfaiting

  
FORFAITING – "WITHOUT RECOURSE DISCOUNTING OF TRADE RECEIVABLES"
The following is produced as a means of providing an additional service to your bank for the benefit of your clients.

We hope that once you have read this you may wish to discuss any matters further with us or to contact us to request a discount price for a particular transaction.
HOW WE CAN BENEFIT YOU AND YOUR INTERNATIONAL CLIENTS
Reduced risk for Deferred Payment / Usance Credits

You can sell the overseas payment risk to us. You are able to conclude the discounting with your client but instead of the need for you to establish a credit line for the payment/bank risk over the period until maturity (or to utilise a pre-established line) you will have our written commitment that upon receipt of satisfactory documents, we will purchase the receivable from you. We will discount the face value of the claim and pay you net proceeds to enable you to then remit proceeds (less your commission) to the exporter. Since Forfaiting is non-recourse Financing, you have removed the credit risk in return for cash up-front.

As the buyer, Intesa Soditic Trade Finance Limited will be assuming the Transfer Risk, Political Risk, Interest Rate risk, Commercial Risk and Foreign Exchange Risk. As the exporter’s bank, you are responsible for ensuring the validity of the underlying trade transaction.
Improved Cash Flow
This structure enables your exporter to receive funds almost immediately after shipment instead of waiting until the payment dates agreed in the contract. The exporter’s cash flow is, therefore, improved.
Increased Fee-based Income for your Bank
in comparison to requesting that the exporter transact on a "collection only" basis, you have generated a situation where you can earn larger profit for your bank as our relationship is with you and not your client. You are therefore in a position to add your required profit margin to our pricing and pass this on to your client. Upon your receipt of discounted proceeds from us, you will retain your profit margin and remit the balance to your client at the rate previously agreed between you and them.
A Marketing Advantage to your client
By passing on to your client details of the variety of country risks that Intesa Soditic Trade Finance Limited is able to forfait, you are creating possibilities for your client to consider export markets that may usually be thought too risky.
Furthermore by ensuring that your clients are aware of the maximum credit period possible for any particular country risk, you are ensuring that they are in the position of being able to provide the most competitive offer to their buyer. As you are aware, many contracts are awarded on the basis of the period of supplier credit available. Please contact us on a case by case basis for the maximum credit periods.
An early and Prompt Indication of the cost Involved
It is necessary for your exporter to receive an indication of the costs involved in the financing, promptly and at an early stage in negotiations in order that he can price his contract appropriately. We are able to provide you with a prompt price indication. Upon acceptance of our indication by your client we will endeavour to provide you with our firm commitment within the period required.

Quotations are offered: -

  • Usually in any major currency
  • On a fixed rate basis or as a margin above LIBOR. If an indication is given as a margin over LIBOR then this is usually fixed upon our receipt of documentation and two days prior to discounting.
  • We will apply a commitment fee for the period from the date of our commitment until the date of discounting and we will state a number of days of grace applicable to the country risk involved. These are included (in addition to the actual number of days until maturity) in the calculation of net proceeds.
Client Services
We hope that the possibilities we can offer allow you to add to the current services you are able to provide to your clients and therefore enhance your current bank/client relationship.

Additional Benefits to your clients are summarised as follows: -
Unencumbered Credit Facilities
Forfaiting does not affect your client’s banking facilities.
Benefits to Balance Sheet
The exporter replaces a receivable with cash.

THE BENEFITS WILL ENABLE YOU TO: -

  • FINANCE YOUR CUSTOMERS WITHOUT UTILISING YOUR CREDIT LINE AT A LOWER COST, DEPENDING ON THE COUNTRY RISK INVOLVED.
  • ALLOW YOU TO FINANCE YOUR CLIENTS FOR PERIODS LONGER THAN ONE YEAR.                     
  • DISCOUNT RECEIVABLES OF YOUR CLIENTS FOR BANKS/COUNTRIES FOR WHICH YOU DO NOT HAVE ESTABLISHED CREDIT LINES