While your customers in some emerging foreign markets may or may not be able to provide satisfactory financial statements on their own companies, they may be able to obtain payment guarantees from their local banks in support of international trade finance.

Meridian offers non-recourse discounting, also known as forfaiting, of bank-guaranteed promissory notes, bills of exchange, letter-of-credit drafts, and similar debt obligations with repayment terms of up to five years.

With a pre-approved forfaiting commitment in hand, you can offer vendor financing to your customer and then sell the foreign debt obligation immediately, without recourse, and receive cash payment for the full amount of your contract.

Forfaiting is fast. Export finance for transactions from $500,000 to $10,000,000 can usually be approved in less than a week and can cover 100% of the contract amount, most often at interest rates much lower than those available in your customer's country.

Besides bank-guaranteed notes and drafts, other term receivables which may be eligible for forfaiting include debt obligations issued or guaranteed by foreign governments, state-owned entities, or major overseas corporations.

STEP 1: You confirm that your customer is going to pay you with promissory notes that bear the aval (guarantee) of a top bank in your customer's country, then contact Meridian with transaction details and the name of the bank for a preliminary quotation.

STEP 2: Once your contract with your customer has been finalized, a written agreement is prepared which spells out the commitment to purchase the notes from your company after you receive them from your customer. The agreement specifies the discount rate and the face amount (principal + interest) for each of the promissory notes, as well as the net amount your company will be paid for the notes.

STEP 3: When the agreement is signed, your company pays a commitment fee which is calculated as a small percentage of the financed amount and covers the time from the commitment date until the date you present the notes for payment.

STEP 4: Upon shipment, delivery, or at whatever time has been agreed between you and your customer, you receive the promissory notes from your customer.

STEP 5: You endorse the notes and present them with a copy of your invoice and shipping documents. Once the validity of the notes and signatures have been verified, your company is paid per the terms and conditions of the above commitment agreement.

Please note that the above steps describe a typical forfaiting process only. Actual transactions may proceed differently from this example.

Click here to read a newspaper article which describes an actual forfaiting transaction.