Letter of Credit Discounting without recourse (Forfeiting)

To accelerate cash flow and reduce debt

Letter of Credit Discounting without recourse (Forfeiting)
  1. Your company (Supplier) enters into contract with Buyer.
  2. Buyer requests L/C issuance to Issuing Bank.
  3. L/C Issuing Bank opens L/C.
  4. SMBC advises L/C to the Supplier.
  5. Supplier (Your company) ships the goods and receives Bills of Lading from shipping company).
  6. Supplier (Your company) delivers shipping documents including B/L to SMBC.
  7. SMBC presents documents to L/C Issuing Bank.
  8. Issuing Bank sends acceptance advice to SMBC.
  9. SMBC makes discounted payment to your company.
  10. L/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.