Forfaiting
The cash purchase of an exporter's receivables (bills of exchange or promissory notes, or simply issued invoices, which the exporter is selling on an open account basis) at a discount. The forfeiter – the purchaser of the receivables – becomes the entity to whom the importer is obliged to pay its debt. By purchasing these receivables - which are usually guaranteed by the importer's bank - the forfaiter frees the exporter from credit and from the risk of not receiving payment from the importer who purchased the goods on credit. Unlike factoring, forfaiting is normally used for receivables against payments which are due over a longer term (90 days to up to 7 years).