Preparing for Growth: Key Financial Priorities Businesses Must Focus in 2026

Global trade volatility, shifting tariff landscapes and evolving domestic policies are reshaping the operating environment for MSMEs. To convert uncertainty into opportunity, businesses must lock in liquidity, sharpen working-capital playbooks and adopt digital trade-finance.

Current policy shifts are already affecting MSMEs (tariffs, counter-measures and domestic regulatory changes), therefore it is essential to implement measures that ensure  liquidity

1) Current policy changes impacting MSMEs 

External tariff shocks & counter-measures. Recent tariff shifts in major markets have raised duties on several product groups and prompted India to roll out export-promotion responses and relief measures for affected sectors. These moves change margins, pricing and working-capital needs for export-dependent MSMEs. 

Mandatory TReDS onboarding for large corporate. The government has pushed measures to expand TReDS usage: companies over a INR250+ cr turnover threshold have been asked to onboard TReDS platforms so MSMEs get faster access to receivables finance. This regulatory nudge materially increases the addressable invoice pool and improves liquidity access for MSMEs. 

Regulatory consolidation and compliance simplification. The RBI’s consolidation of circulars into comprehensive Master Directions reduces compliance complexity for lenders, a development that can lower operational friction and make financiers more willing to scale MSME lending. 

Redefined MSME classification & supportive fiscal schemes. In 2025 the MSME classification parameters were updated (investment/turnover thresholds), impacting eligibility for targeted schemes; concurrently, the government continues interest-subvention and targeted support programs to stabilize credit costs. These changes alter which enterprises qualify for specific subsidies and guarantee schemes. 

Implication: Policy moves are widening formal financing access (via TReDS mandates, PSL clarity and subsidy continuity) while trade tariffs and counter-measures change cash-flow dynamics for exporters, so tactical financial planning is essential.

2) What businesses must prioritize to solidify liquidity

Some of the high-impact, professional actions CFOs and finance head should implement to manage risk management and working-capital. 

A. Recompute your cash conversion cycle (CCC) and set target bands

• Measure baseline, DSO (Days Sales Outstanding), DPO (Days Payable Outstanding), and Inventory Days.

• Set target CCC reduction (e.g., reduce CCC by 10–20% over 12 months) and convert the target into monthly actions (AR collection cadence, inventory turns).

• Use NPV of working-capital improvements to prioritize projects (rank by IRR / payback).

B. Convert receivables into predictable liquidity (trade receivables financing)

• Move receivables to discounting / factoring channels through TReDs to convert high-DSO AR into cash.
  
  
• Distinguish on-balance vs off-balance trade finance, where possible use without-recourse TReDS/discounting to keep balance-sheet headroom.
  (This reduces leverage ratios and cost of capital.)

C. Integrate TReDS & deep-tier financing (operational steps)

• Map invoices & counterparties: classify invoices by tenor, buyer credit quality, and sector risk. Prioritize invoices from buyers already on TReDS.

• ERP to  TReDS API linking: enable automatic invoice export from ERP/Accounting (e.g., Tally/SAP/QuickBooks) to the TReDS platform to shorten time-to-funding and reduce human error.

• KYC & buyer onboarding: coordinate with large buyers to accept invoices on TReDS; push for buyer acceptance SLAs.

• Pricing & bid strategy: segment invoices for competitive bidding (shorter tenor = lower discount), and set minimum acceptable discount rates tied to cash needs.

• Deep-tier / S2S (small-to-small) play: enable deeper tiers to participate by aggregating invoices from tier-2/3 suppliers.

D. Optimize payables without damaging supplier relations

• Implement dynamic discounting, offer buyers a sliding discount for earlier payments when you have surplus liquidity, and secure longer payables when liquidity is tight.

• Negotiate staged payment terms with strategic suppliers to smooth procurement spikes while ensuring supplier viability.

E. Strengthen AR collections & credit risk management

• Adopt a segmented credit policy (A/B/C customers) – stricter terms for C segment.

• Use automated reminders, lockbox collections, and early-payment incentives.

• Run periodic AR ageing and set trigger actions at 30/60/90 days (escalations, factoring, or legal).

F. Build multi-layered contingency buffers & hedges

• Maintain a working-capital buffer line (e.g., 5–10% of monthly operating expenses) via committed credit lines or receivables funding.

• Policy shocks can compress margins rapidly for exporters. For export exposure, deploy FX hedges and collateral lines to protect margins against tariff-driven price moves.
  

G. Revisit capital structure & cost of funds

• Compare blended cost of capital across instruments: term loans, overdrafts, factoring, invoice discounting, and supply-chain finance.

• Where PSUs or government schemes provide cheaper finance (subvention/CGTMSE), prioritize them for capex or working-capital needs. 

3) Integrating TReDS: practical playbook (technical + business steps)

TReDS facilitates discounting of validated invoices through onboard financiers. Which is crucial when CCS volatility rises and tariffs compress margins.

Step-by-step:

• Internal readiness audit.

• Clean AR ledger, standardize invoice formats, and reconcile buyer master data.

• Identify the percentage of invoices that qualify for TReDS (accepted by buyer, clean GST, no disputes).

• Choose TReDS partner(s) & technical onboarding. 

• Evaluate platforms for bidder depth, API maturity, settlement SLA, fees, and S2S capabilities.

• Implement API/CSV upload flow from ERP; test with sample invoices.

• Buyer coordination & acceptance workflow. 

• Engage buyers to accept invoices on the platform and define validation SLAs.

• Conduct SLAs with buyers.

• Operationalize bidding & funding.

• Configure minimum acceptable discount thresholds and approval workflows.

• Automate settlement bank details and reconciliation routines.

• Performance tracking & margin optimization. 

• Track time-to-funding, average discount rate, bidder count per invoice and funding hit-rate. Use these KPIs to renegotiate terms or switch platforms as needed.

KPIs to monitor: average time from invoice upload to funds received, average discount (%) by tenor, bidder count, percent of invoices funded, and impact on CCC.

4) Industry-specific tactics 

Manufacturing (high inventory days): tighten inventory turns via vendor-managed inventory (VMI), and use production-linked receivable discounting during ramp-ups.

Exporters / Textiles: hedge FX exposure, use buyer-validated export invoices on TReDS, and access ad-hoc government export reliefs or temporary duty removals if available. 

Reuters

Services / IT: move to milestone-based invoicing to shorten DSO and route predictable milestone invoices to discounting marketplaces.

Retail / FMCG: negotiate vendor payment terms based on category seasonality and use dynamic discounting for promotional inventory purchases.

6) Checklist to ensure liquidity for next year

• Run a CCC deep-dive and set a measurable CCC reduction target.

• Map invoices eligible for TReDS, and integrate ERP → M1Xchange TReDS APIs.

• Set up a receivables funding policy (thresholds, minimum acceptable discount, approved financiers).

• Implement AR segmentation, automate collections, and use factoring for chronic late payers.

• Build a contingency line (committed credit or funded receivables buffer).

• Reassess capital structure to take advantage of government subvention schemes and PSL-friendly lending.

Last modified: January 2, 2026