Letter of Credit Discounting without recourse (Forfeiting)

To accelerate cash flow and reduce debt

Letter of Credit Discounting without recourse (Forfeiting)
  1. ①Your company (Supplier) enters into contract with Buyer.
  2. ②Buyer requests L/C issuance to Issuing Bank.
  3. ③L/C Issuing Bank opens L/C.
  4. ④SMBC advises L/C to the Supplier.
  5. ⑤Supplier (Your company) ships the goods and receives Bills of Lading from shipping company).
  6. ⑥Supplier (Your company) delivers shipping documents including B/L to SMBC.
  7. ⑦SMBC presents documents to L/C Issuing Bank.
  8. ⑧Issuing Bank sends acceptance advice to SMBC.
  9. ⑨SMBC makes discounted payment to your company.
  10. ⑩L/C Issuing Bank makes payment at maturity.
  • ・Supplier gets paid early (without recourse) based on L/C and acceptance from Issuing Bank
  • ・Additional assured source of potentially cheaper financing.
  • ・Help obviate the need for currency hedging
  • ・Potentially “Off-Balance Sheet” for Supplier subject to approval of certified accountants/auditors.