Discount and Forfaiting: Difference between pages

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imported>Doug Williamson
(Cross reference with Discount rate page.)
 
imported>Doug Williamson
(Classify page.)
 
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# ''Noun.'' In relation to a discount instrument, the difference between the current market price and the redemption amount.
A process of purchasing a negotiable instrument without recourse to previous holders, the credit of the negotiable instrument normally having been strengthened by the additional of an aval.
# A coupon bond trading in the market ''at a discount'' has a market value less than its par value.
 
# A foreign currency trading ''at a discount'' in the forward foreign exchange market is weaker in the forward market than in the spot market.
 
# ''Verb.'' In relation to a money amount, make smaller. For example, to discount back a future cashflow to a (smaller) present value.
A forfaiter, usually a bank or a non-bank financial institution, provides forfaiting services.
# ''Verb.'' In relation to financial instruments, to exchange an instrument with a future maturity date, for a 'discounted' market value today.  Today's market value being smaller than the redemption amount (receivable at maturity) by the amount of the discount.
 
The forfaiting agreement sets out the arrangement between the initial seller and the primary forfaiter.
 
 
Forfaiting is sometimes known as 'bill discounting'.
 
 
One application is the discounting - without recourse - of a promissory note, bill of exchange or letter of credit received from an overseas buyer by an exporter.
 
 
Forfaiting purchases qualified, select, individual transactions (in contrast with factoring which normally purchases all of a firm's receivables).
 


== See also ==
== See also ==
* [[Coupon bond]]
* [[Aval]]
* [[Discount instruments]]
* [[Bill of exchange]]
* [[Discount rate]]
* [[Bill discounting]]
* [[Premium]]
* [[Factoring]]
* [[Spot market]]
* [[ITFA]]
* [[Negotiable instrument]]
* [[Promissory note]]
* [[Recourse]]
* [[Supply chain finance]]
* [[Uniform Rules for Forfaiting]]
* [[Without recourse]]
 
[[Category:Cash_management]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]
[[Category:Trade_finance]]

Revision as of 09:33, 24 August 2019

A process of purchasing a negotiable instrument without recourse to previous holders, the credit of the negotiable instrument normally having been strengthened by the additional of an aval.


A forfaiter, usually a bank or a non-bank financial institution, provides forfaiting services.

The forfaiting agreement sets out the arrangement between the initial seller and the primary forfaiter.


Forfaiting is sometimes known as 'bill discounting'.


One application is the discounting - without recourse - of a promissory note, bill of exchange or letter of credit received from an overseas buyer by an exporter.


Forfaiting purchases qualified, select, individual transactions (in contrast with factoring which normally purchases all of a firm's receivables).


See also