Distinguish between 'factoring' and 'forfaiting' in export management.

Factoring is suitable for financing several and small claims for Consumer goods with credit terms between 90-180 days. Forfaiting is used to finance Capital goods exports with Credit terms between a few months and seven years. Factoring covers only Commercial risk. Forfaiting additionally covers political and transfer risk. A factoring house or a factor is a bank or Specialised finance firm that performs financing through purchase of invoices or account receivables. A forfeiter is a specialised financial firm or department in a bank that performs non-recourse export financing through the medium term trade receivables. Factoring is an attractive option for small and medium sized exporters particularly during periods of rapid growth because Cash flow is preserved and risk is virtually eliminated. In forfaiting, receivables are normally guaranteed by the importer bank which allows the exporters to take the transaction off the balance Sheet to enhance key financial ratios.