FORFETING AS A MODERN FORM OF FINANCING A COMPANY

Jelena Vapa-Tankosić; Marko Ivaniš; Dejan Vukosavljević

doi:10.5937/Oditor2103007V

Authors

Jelena Vapa-Tankosić Faculty of Economics and Engineering Management in Novi Sad, Serbia Author
Marko Ivaniš Faculty of Economics and Engineering Management in Novi Sad, Serbia Author
Dejan Vukosavljević Faculty of Management, Sremski Karlovci, Serbia Author

DOI:

https://doi.org/10.5937/Oditor2103007V

Keywords:

forfeting, purchase of receivables, financial market

Abstract

Forfeiting technique includes the purchase of outstanding long-term foreign trade receivables that meet certain conditions in terms of maturity and type. In that way, the company has the opportunity to sell to a commercial bank or some other specialized financial body for forfeiting its foreign trade claim, which is not burdened by the possibility of recourse claims of other persons against the buyer of the claim, which is provided by some collateral. Through the forfeiting transaction, the company eliminates possible losses due to illiquidity, risks of rising interest rates in the future, risks based on fluctuating exchange rates, risk based on changes in creditworthiness and financial position of debtors, eliminates administrative problems and associated costs of debt collection. This paper aims to point out the process of applying the forfeiting technique and the discount rate mechanisms depending on the risk, repayment period, currency and the amount of the transaction itself.

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