EXPLAIN the difference between factoring and forfaiting

Particulars Factoring Forfaiting A) Meaning Factoring involves sales of receivables to the financial institution called factor in exchange for immediate cash payment Forfaiting is a form of export financing where the exporter sells the rights to trade receivables to a forfaiter and receives instant cash B) Recourse or non-recourse May be on Recourse or Non-recourse basis Always non-recourse C) Amount paid Firms are generally paid 80% to 90% upfront 100% on the value of exported goods is paid D) Type of receivables Receivables may either domestic or international Receivables are international E) Cost Factoring cost in the form of factor commission or fees is to be borne by the seller Overseas Buyer bears the forfaiting cost, if any F) Secondary market Factoring does not involve a secondary market for the receivables, meaning that the transaction is complete once the receivables are sold to the factor. Forfaiting has a secondary market where the receivables can be traded, enhancing liquidity and providing additional opportunities for investors