Forfaiting Glossary

Glossary Items beginning with : H

Hair Cut

The difference between the face value of a receivable and the cash price paid to buy that receivable. A Hair Cut is also used in times when the obligor/guarantor is in financial difficulty so that the lenders take a Hair Cut to fees, interest and sometimes principal itself to try and avoid a default.

Hedging

The reduction or mitigation of risk, e.g. protecting against adverse foreign exchange movements.