Forfeiting 

This is the purchase of accepted bills of exchange, documentary letters of credit or any other promissory form of payment made in foreign currency. The acquirer of the bill explicitly waives his legal right to claim against the previous debt providers, which is known as the "no recourse" clause.

When compared to other alternatives, this is a simple, cheap way to enter markets such as those in Eastern Europe, Morocco, India, Vietnam or any other market considered a "risk country".

Advantages and disadvantages of a forfeiting contract

Advantages

• Exporters improve their liquidity as they are paid in cash, without changing their borrowing capacity and without making use of their money or policies.
• It eliminates future political and administrative risks, such as trading risks and those related to the exchange rate of the currencies involved, which means it is possible to know how much the operation will cost, at a fixed interest rate, beforehand.
• It saves on administration and collection costs.
• It is possible to finance 100% of the transaction.
• No initial payment is necessary.
• It is possible to offer clients longer payment periods, which is a tremendous advantage from a commercial point of view.

Disadvantages

• The main disadvantage, as in the case of factoring and confirming, is the high interest rates and the fact that the forfeiter assumes the risk.
• The exchange and administrative controls in some countries.
• Importers are often not very willing to offer collateral or a guarantee.