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Trading Terms

Forfaiting

In the world of finance, a forfaiter is an individual or company that buys a business's accounts receivable. These receivables are typically based on negotiable instruments like bills of exchange and promissory notes. Unlike factoring, forfaiting deals with larger, longer-term obligations. This means that the forfaiter takes on a higher level of risk, both in terms of commercial and political risk. As the bills are purchased on a non-recourse basis, the forfaiter assumes full responsibility for any potential losses.

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