Forfaiting as a form of financing investment projects

In Russia, the term "Forfeiting" many simply do not know. Note that the concept has spread forfeiting the beginning of the 60s of the twentieth century, foreign trade under the influence of increasing competition among exporters for market sales. However, this type of financial transaction may be used for commercial transactions within the country. So, forfeiting a form of transformation of the commercial bank loan. It applies if the buyer does not have sufficient funds to purchase any product. As a result, the buyer (investor) is looking for seller of goods which he needs, and arranges for its delivery to the conditions of forfaiting, but not enough. Require the consent of the third party - a commercial bank. Each of the parties involved in the transaction has its own objectives, which are determined by the size of low income and are reflected in the contract concluded. It specifies the conditions and obligations of the parties. After the conclusion of the contract the buyer to the seller writes and sends a set of bills, the total cost of which equals the value of the sold object with interest deferred payment, ie, for providing the commercial loan. Maturity date are evenly distributed over time. Typically, each bill issued to six months. However, the period may be extended up to a year. The seller of the goods (the object), in turn, transmits them to a bill from the beneficiary (investor) to a commercial bank without recourse to himself, and immediately gets the money for the sold goods. The words "without recourse to a" seller exempt from property liability if the bank fails to recover from the drawer specified in the promissory note amount. Thus, trade credit has actually not the seller, and the bank agreed to consider a set of bills and has taken all the risk. If the buyer is a first-rate debtor, the bank, taking into account the bill, in order to reduce the financial risk may require additional unconditional payment from another financial institution acquired by debt. In this case, the investor (buyer) in order to obtain these guarantees provides its assets in the bank, guaranteeing payment of fees. The purpose of the seller is simple - to sell the goods and receive income with minimal risk, the bank's goal is another - a guaranteed discount income from discounting bills. The buyer, in turn, has an opportunity for credit financing of its investment project. Alas, in our country, forfeiting has not yet been spread for many reasons. Among which are the high risks of default by one party, the instability of the economy and high interest rates.