Factoring and forfaiting differ in nature, scope, and concept. Factoring pertains to the selling of a firm's accounts receivables to a third party (a factoring company or a lender) at a discounted price. In forfeiting, exporters relinquish their rights to the forfaiter in exchange for immediate cash.

What is the meaning of forfeiting in business?

ForfaitingForfaiting. 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 on a “without recourse” basis.

What is forfeiting in simple words?

Forfaiting is a means of financing that enables exporters to receive immediate cash by selling their medium and long-term receivables—the amount an importer owes the exporter—at a discount through an intermediary. ... A forfaiter is typically a bank or a financial firm that specializes in export financing.