What do you mean by Forfaiting?

What do you mean by Forfaiting?

Forfaiting is a method of trade finance that allows exporters to obtain cash by selling their medium and long-term foreign accounts receivable at a discount to a forfaiter, a specialized finance firm or a department in a bank.

What does EAR99 mean?

Export Administration Regulations
What is EAR99? Items not designated under the control of another federal agency or listed on the Commodity Control List (CCL) are classified as EAR99 (Export Administration Regulations). EAR99 items generally are low-technology consumer goods not requiring a license, however there are some exceptions.

What is forfaiting and its advantages and disadvantages?

Only major selected currencies are taken for forfaiting, as they possess international liquidity. Forfaiting reduces the risk for exporters, however, it is more expensive as compared to the basic financing provided by the banks or financial institutions, which results in higher export cost.

What are the benefits of forfaiting?

The advantages of forfaiting for the exporter:

  • Since the transactions are without recourse; fully eliminating political, transfer and commercial risk of the importer,
  • Protects the exporter from future interest rate increases or exchange rate fluctuations.

What are CIP terms?

CIP (Carriage And Insurance Paid To) means that the seller is responsible for delivery, delivery costs, and insurance costs of the goods until they are transferred to the first carrier tasked with transporting the goods. Once this delivery takes place, the buyer takes on all responsibility.

What Incoterms 2021?

Last updated 1 April 2021. As an exporter, you need to make sure shipping and delivery responsibilities are written down and clearly understood. Using international commercial terms (known as incoterms) in contracts can help you do this. Incoterms are a set of internationally recognised 3-letter trade terms.

What are the main functions of the Incoterms?

Incoterms, a widely-used terms of sale, are a set of 11 internationally recognized rules which define the responsibilities of sellers and buyers. Incoterms specifies who is responsible for paying for and managing the shipment, insurance, documentation, customs clearance, and other logistical activities.

What are HTS and ECCN codes?

An ECCN (Export Control Classification Number) is a five alpha-numeric designation for dual-use items that are listed on the Commerce Control List (CCL) to ensure these items are not for military use. An HS (Harmonized System) code is used for standardized international trade.

What are the features of forfaiting?

Salient Features of Forfaiting

  • In forfating credit is advanced to the importer of capital goods for a certain period.
  • The amount of payment is receivable in any convertible currency.
  • The letter of credit or bank guarantee is given by the importer’s bank.
  • Finance is provided on a fixed or floating interest rate.

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