{"id":515,"date":"2019-11-06T08:25:27","date_gmt":"2019-11-06T08:25:27","guid":{"rendered":"https:\/\/m1xchange.com\/thought-xchange\/?p=515"},"modified":"2024-02-28T11:45:06","modified_gmt":"2024-02-28T11:45:06","slug":"treds-why-msmes-need-to-register-right-now","status":"publish","type":"post","link":"https:\/\/www.m1xchange.com\/thought-xchange\/treds-why-msmes-need-to-register-right-now\/","title":{"rendered":"TReDS: Why MSMEs need to register RIGHT NOW"},"content":{"rendered":"
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MSMEs contribute to 37% of the total GDP of the nation and play a vital role to uplift the Indian economy. Despite being the backbone of the Economy, MSMEs often struggle in garnering optimal working capital and smooth cash0flows, one of the big reasons being the slow-paying invoices. To help MSMEs combat this problem the government introduced the concept of TReDS (Trade receivable Discounting System).<\/p>\n<\/div>\n<\/div>\n

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What is TReDS?<\/strong><\/h2>\n

TReDS is an electronic platform that allows businesses to auction trade receivables such as invoices, and the platform serves as a transparent and quick medium for the MSME vendors to avail funds at cheaper rates through banks and factoring companies.<\/strong> It involves a digital mechanism having 3 stakeholders, the corporate buyer, the MSME supplier<\/strong><\/a>, and the financier<\/strong><\/a>. The MSME supplier uploads an invoice on the M1xchange platform which is approved by its buyer. On approval, the invoice is opened for bidding by various financiers on the platform. Once the MSME accepts the best-suited bid, the discounted amount is credited to the MSME\u2019s bank account on the next day of bid acceptance. This gives MSMEs quick access to working capital at a very low rate of interest.<\/p>\n

Being a completely digital platform the transactions are 100% transparent and the overall administration cost for vendor financing, payments, and settlements are significantly reduced lowering the overall cost of a trade.<\/p>\n

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Key Participants in TReDS<\/p><\/div>\n

Key Benefits for MSMEs<\/strong><\/h2>\n

TReDS helps a supplier to realize payment against an invoice raised to a buyer, through a financier at discounted rates, in significantly less number of days as compared to the buyer company\u2019s regular credit period timelines. Here are some of the key benefits of TReDS<\/strong> <\/a>for MSMEs<\/p>\n