Skip to main content

Forfaiting of letters of credit

Forfaiting of receivables under deferred payment letters of credit represents a model of financing of the seller (exporter), where the bank pays, immediately and without recourse, the discounted amount of forfaited receivable under letter of credit to the seller being the letter of credit beneficiary. The beneficiary of the letter of credit concludes a forfait contract with the bank befor the payment. Upon maturity, the issuing bank effects payment under the letter of credit in favour of the bank, thereby settling the forfaited receivable.

Benefits

  1. Improving liquidity
    Convert the receivables from the deffered payment letters of credit, opened in your favour, into cash and thus enhance your liquidity without creating new indebtedness. By selling the receivables to the bank, you can obtain working capital before due dates.
  2. Risk hedging
    By forfaiting of receivables under the letter of credit, the bank takes over:
    -Any political, transfer and commercial risk (risk of payment default)
    -Exchange rate risk
    -Interest rate risk.
  3. Financing without new indebtedness and under more favourable conditions
    The bank forfaits receivables under the letter of credit against the limit of the bank of the buyer which opened the letter of credit and the bank defines the price of the discount according with the credit risk of the respective buyer's bank.
  4. Additional services related to letters of credit and documentary business
    We offer a complete service related to documentary letters of credit in the country and abroad, import (nostro) and export (loro) letters of credit, from opening or advising, completing of documents and amending letter of credit conditions, to payments under letters of credit, and additional possibilities of financing through forfaiting letters of credit.  
  5. Other options for purchase of your receivables
    Improve your cash flow and redirect funds into new business operations. Our services in the area of purchase of receivables also include purchase of receivables on the basis of invoices and other commercial documents - invoice discounting/financing, as well as the discounting bills of exchange.
  6. Providing expert advice
    Years of experience and expertise in standard and complex transactions, our professional and trained staff and numerous awards in the field of trade finance vouch for a high quality of service. Given that possibility for forfaiting of letters of credit depends on the individual terms and conditions of each letter of credit and creditworthiness of the issuing bank, we suggest that you contact us before choosing the issuing bank, as well as during the course of negotiating letter of credit terms and conditions at tradefinance@unicreditgroup.zaba.hr.
  7. International presence of UniCredit Group and a large correspondent banking network
    Zagrebačka banka and UniCredit Group represent a strong partner that can support your international business.

Arrangement

Use

In general, forfaiting is done without a recourse towards the letter of credit beneficiary, and no additional collateralization is required.

Forfaiting can be done only for receivables from letters of credit available by deferred payment and for letters of credit with terms and conditions, the goods and the participants acceptable to us for forfaiting. In case you would like to check the acceptability of a particular letter of credit, contact us at tradefinance@unicreditgroup.zaba.hr.

Forfaiting of a letter of credit depends on the assesment of the creditworthiness of the issuing bank (as the debtor under the forfaited receivables) and on the terms and conditions of the letter of credit itself.
We suggest that you contact us before choosing the issuing bank, as well as during the course of negotiating the letter of credit terms and conditions at tradefinance@unicreditgroup.zaba.hr.

The only receivables which can be forfaited under a letter of credit are those for which the issuing bank has confirmed payment under the letter of credit on its due date and for which the issuing bank has accepted and confirmed effecting of the payment on the due date in favour of Zagrebačka banka.

Costs of forfaiting the receivables under a letter of credit are the interest and the fee. The interest is calculated in advance in the form of a discount for the period of time from the day of discounting of the receivables until the due date, in accordance with the Interest calculation rules of Zagrebačka banka.

Zagrebačka banka will process the personal data entered in the form below for the purpose of arranging a meeting in one of its branches and will keep them for 30 days. We suggest that you enter your OIB, so the banker could prepare the best financial offers based on the available data.
Read more in the Information on Personal Data Processing.

Name of the Company *

Company's OIB *

Your contact

Choose business center