Trade Receivables Discounting System or TReDS is a welcome step by RBI to secure finances for micro, small and medium enterprises.
TReDS is an online platform for facilitating the financing of trade receivables of MSMEs from corporate buyers through multiple financiers. It enables discounting of invoices of MSME sellers raised against large corporate, allowing them to reduce working capital needs. During a is a financial transaction where a seller of any goods or services sells its invoices to a third party (called a factor) at a discount, also called as bill discounting, to get upfront payment. Factoring business requires more digital infrastructure, information confidentiality and recourse mechanisms amid the push it has received through the Trade Receivables Discounting System (TReDS). It is mandated by Reserve bank of India in 2014.
Features of TReDS
- Unified Platform For Sellers, Buyers And Financiers
- Easy Access To Funds
- Competitive Discount Rates
- Transact Online
- Seamless Data Flow
- Standardised Practices
M1xchange TReDS
The Reserve Bank of India granted approval to Mynd Solutions Pvt Limited to set up and operate M1xchange, the first trade receivable exchange in India. M1xchange has digitally transformed the process of gaining access to working capital for MSMEs via invoice discounting through multiple financiers. TReDS is an answer to the everlasting cash flow issues of the MSMEs in India and effective solution to drive the MSME sector to the next phase of Indian economy.
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