What is forfaiting in SAP FI - Financial Accounting?

SAP Term: forfaiting

• Component: FI

• Component Name: Financial Accounting

• Description: A form of financing common in foreign trade. Given sufficient certainty that receivables will be paid, special institutions purchase bills of exchange or receivables from exporters, without the exporter being liable to recourse in the event of non-payment. Exporters improve their liquidity by converting receivables into cash and remove long-term receivables from their balance sheet.

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• Key Concepts: 
  Forfaiting is a type of financing used in international trade. It is a form of receivables financing that involves the purchase of a company’s receivables from its customers at a discounted rate. The company selling the receivables is known as the forfaiter, while the company buying the receivables is known as the forfait buyer. The forfait buyer pays the forfaiter an amount that is less than the face value of the receivables. 
  
  How to use it: 
  In SAP Financial Accounting, forfaiting can be used to finance international trade transactions. The forfait buyer pays the forfaiter an amount that is less than the face value of the receivables. The forfaiter then uses this money to finance their international trade transactions. The forfait buyer then collects on the receivables from the customer and pays back the forfaiter with interest. 
  
  Tips & Tricks: 
  When using forfaiting in SAP Financial Accounting, it is important to ensure that all parties involved are aware of their obligations and responsibilities. It is also important to ensure that all documents related to the transaction are properly documented and stored in a secure location. 
  
  Related Information: 
  For more information on forfaiting in SAP Financial Accounting, please refer to SAP Help documentation or contact your local SAP representative.