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Daily Tribune
a day ago
- Business
- Daily Tribune
Forfaiting a Lucrative option
Forfaiting started in the middle of last Century in Europe and it is taking shape all over the globe to promote trade finance and boost relationship between exporters and importers. In this context, the ICC Rules for Forfaiting (URF 800), aimed to create a standard set of rules to be applied within the forfaiting market worldwide, moreover, the United Nations Commission on International Trade Law (UNICITRAL) endorsed (URF 800). Needless to say, this is good work for ICC, as this rule and the other rules of UCP 600, URDG 758, etc., show the ICC commitment to promote international trade. 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 'without recourse' basis. Forfaiting can be undertaken by banks or finance firms that perform non-recourse export financing through the purchase of trade receivables. 'Without recourse' or 'non-recourse' means accepting the risk of non-payment. Forfaiting eliminates risk of non-payment once the goods have been delivered to the foreign buyer, in accordance with the agreed sale terms. Advantages of forfaiting include, inter alia, elimination of all risk to the exporter with full financing of contract value, exporters can offer medium and long-term financing in markets where the credit risk would otherwise be high, forfaiting works with bills of exchange, promissory notes, or a letter of credit, foreign buyers provide bank guarantee, letter of guarantee or LCs and financing can be arranged on a one-shot basis at fixed or floating interest rate. Once forfaiter commits to the deal and sets the discount rate, the exporter can incorporate the discount into the selling price. The exporter then accepts a commitment issued by the forfaiter, signs the contract with the importer, and obtains, if required, a guarantee from the bank of the importer that provides the documents required to complete the forfaiting. The exporter delivers the goods to the importer and delivers the documents to the forfaiter who verifies them and pays as agreed in the deal. Since this payment is without recourse, the exporter has no further interest in the financial aspects of the transaction and it is the forfaiter who must collect the future payments due from the importer. The cost of forfaiting to the exporter is determined by the agreed rate of discount for the tenor of the receivables and a margin reflecting the risk being sold. In addition, there are certain costs that are borne by the importer that the exporter should also take into consideration. The degree of risk varies based on the importing country, the length of the loan, the currency of the transaction, and the repayment structure. The higher the risk, the higher the margin and therefore the discount rate. However, forfaiting can be more cost-effective than traditional trade finance tools because of many attractive benefits it offers to the exporter. We believe, it is a beneficial advisable tool to interested parties to promote trade finance.
Time Business News
11-05-2025
- Business
- Time Business News
Helping Agents and Brokers Secure Standby Letters of Credit (SBLCS) to Close Complex Global Deals
Toronto, Canada – As cross-border trade, infrastructure, and energy deals grow in complexity, Standby Letters of Credit (SBLCS) have become essential instruments for brokers and agents seeking to close transactions and prove financial strength on behalf of their clients. GTFSolutions (GTFS), a premier Canadian financial services firm, has become a trusted partner in structuring, issuing, and delivering SBLCS worldwide through Tier 1 and Tier 2 banking channels. Whether facilitating a $100 million real estate development, enabling a long-term fuel supply contract, or supporting a massive infrastructure bid, brokers and agents face one consistent barrier: the lack of credible financial guarantees that satisfy global counterparties. GTFS helps overcome that barrier by guiding brokers through a fast, legal, and compliant process to secure SBLCS that command respect and results. Bridging the Trust Gap with Globally Recognized SBLCS 'Every serious deal involves risk, and SBLCSS are how we mitigate it,' said Alexander Jean-Baptiste, CEO of GTFS. 'We help brokers and agents transform promising opportunities into bankable, fund-ready transactions.' GTFS issues both bank-issued SBLCS and collateral-backed SBLCS for clients in energy, commodities, aviation, construction, shipping, and real estate. These SBLCS are delivered via SWIFT MT760 and adhere to UCP 600 and URDG 758 standards, ensuring compliance with international trade law and acceptance by counterparties globally. Case Study 1: GTFS Secures SBLC for Oil Deal in the Gulf In late 2024, a Nigerian intermediary approached GTFS on behalf of a buyer negotiating a crude oil supply contract with a UAE-based refinery. The seller demanded a confirmed SBLC from a European or North American bank—something the buyer's local bank could not deliver. GTFS evaluated the transaction, onboarded the client with one of its partner institutions, and arranged a $50 million SBLC, issued within 72 hours after funds were secured via escrow. The SBLC gave the refinery the confidence to release the allocation and begin shipment. 'The entire deal hinged on the SBLC, and GTFS delivered,' said the agent. 'Their team understood the urgency, navigated compliance, and secured our client's credibility.' Case Study 2: Real Estate Acquisition in Spain Made Possible with GTFS SBLC An American commercial real estate firm sought to acquire a historic property in Madrid but faced intense competition. The seller required a bank instrument to confirm financial capability before entering exclusive negotiations. GTFS structured and delivered a $22 million SBLC, which the seller's legal counsel and bank accepted. The client won the bid and proceeded to closing within 30 days. 'This was the edge our client needed. The SBLC from GTFS made the difference between being taken seriously and being left behind,' said the buyer's agent. How GTFS Helps Brokers Secure SBLCS for Clients GTFS specializes in making a complex process simple. The firm's turnkey SBLC issuance support includes: KYC and compliance onboarding Instrument structuring based on transaction type Draft preparation for SBLC text (UCP 600 / URDG 758 compliant) Escrow and blocked funds arrangements SWIFT MT760 delivery via partner banks Proof of readiness letters for initial negotiations 'Brokers trust GTFS because we do more than issue documents—we close gaps and create confidence,' said Sophia Brar, CFO of GTFS. 'An SBLC from GTFS isn't just a piece of paper—it's a key that unlocks the deal.' Who Needs SBLCS? SBLCS serve as financial guarantees that can be used to: Guarantee payment in international trade deals Secure performance obligations in construction or infrastructure projects Assure lease or purchase payments in real estate transactions Replace cash deposits or escrow requirements Support tenders and bid bonds for government contracts Because SBLCS are irrevocable, bank-issued guarantees provide unmatched assurance in high-stakes transactions, and GTFS helps make them accessible. Trusted SBLC Channels Through Global Banks GTFS maintains active relationships with issuing banks in Canada, Switzerland, Germany, Hong Kong, Singapore, the UAE, and the U.K. Through these partnerships, the firm ensures brokers can offer their clients: Tier 1 SBLCs from globally recognized banks Tier 2 options with faster processing and lower costs Collateral-backed SBLCs for clients without strong credit ratings All instruments are issued under regulated conditions and follow international anti-money laundering (AML) and know-your-client (KYC) protocols. Broker Support Program: Closing Deals and Earning Commissions GTFS's Broker Assistance Program is designed for agents and brokers who regularly support clients in global trade and finance. The program includes: Commission-based compensation White-labeled financial documents NDA protection for agent-client relationships Priority instrument processing Training and compliance briefings 'Brokers are our partners, not just clients,' said Willard Dunne, Head of Operations. 'We succeed together by building trust—one deal, one SBLC at a time.' Contact GTFS to Secure SBLCs for Your Clients Today If you're an agent or broker working with buyers or sellers in high-value international transactions, GTFS can help you issue the Standby Letter of Credit that validates your deal and earns trust from both parties. 📞 1-888-305-9992 📧 info@ 🌐 🔗 Social Media: About GTFSolutions GTFSolutions is a Canadian-based financial services provider specializing in international financial instruments, including Standby Letters of Credit, SWIFT messaging, Proof of Funds, Comfort Letters, and Escrow services. GTFS helps brokers and agents navigate complex international deals with speed, integrity, and legal compliance, serving clients across real estate, oil and gas, commodities, aviation, and infrastructure sectors. TIME BUSINESS NEWS
