TReDS
The Trade Receivables E-Discounting System (TReDS) is an electronic platform in India that allows MSMEs to convert their unpaid invoices into immediate cash.
Instead of waiting 30, 60, or 90 days for payment from big corporate buyers, MSMEs can sell those invoices to banks and financial institutions at a discounted rate and get paid almost immediately.
It is regulated by the Reserve Bank of India to ensure transparency and security.
In simple words:
You raise an invoice - upload it on TReDS - get paid early.
TReDS Platform
MSMEs often face delayed payments from large corporates and government departments. This creates:
- Working capital shortage
- Dependency on loans
- Pressure on daily operations
- Growth limitations
TReDS was created to solve this exact problem without asking MSMEs to provide collateral.
Who can get TReDS License?
TReDS involves three main participants:
1. MSME Sellers
Micro, Small, and Medium Enterprises that upload invoices.
2. Corporate Buyers
Large companies, CPSEs, and government departments that purchase goods/services.
3. Financiers
Banks and NBFCs that bid on the invoices and provide funds.
It’s a three-party ecosystem designed for smooth invoice financing.
How Does TReDS Platform Work?
Here’s the process simplified:
Step 1: Invoice Generation
The MSME raises an invoice and uploads it on the TReDS platform.
This invoice is called a Factoring Unit (FU).
Step 2: Buyer Acceptance
The corporate buyer logs in and digitally accepts the invoice.
Step 3: Competitive Bidding
Multiple financiers bid on the invoice. They quote their discount rates.
Step 4: Discounting & Payment
The MSME selects the best bid.
The financier pays the MSME after deducting a small discount charge.
The buyer pays the financier on the due date.
No collateral. No chasing payments.
Key Benefits of TReDS for MSMEs
Collateral-Free Financing:
No need to pledge assets or property.
Improved Liquidity:
You don’t have to wait 60-90 days for cash.
Competitive Interest Rates
Because multiple financiers bid, MSMEs get better pricing.
Reduced Working Capital Crunch
Helps manage operations smoothly.
For growing startups and MSMEs, this can be the difference between surviving and scaling.
Benefits for Corporate Buyers
TReDS isn’t just for MSMEs.
Corporate buyers also benefit:
- Stronger vendor relationships
- Better cash flow management
- Transparent payment tracking
- Compliance with MSME payment norms
TReDS Portal
As per recent guidelines, all companies with turnover exceeding ₹250 crore must register on TReDS platforms.
This rule ensures that large companies cannot delay payments without accountability.
If your company crosses this threshold, registration is not optional.
Major TReDS Platforms in India
India currently has three RBI-approved TReDS platforms:
1. Receivables Exchange of India Ltd (RXIL)
One of the earliest and widely used platforms.
2. M1xchange
Known for strong MSME participation.
3. A.TReDS Ltd (Invoicemart)
Backed by financial institutions and corporates.
MSMEs can register on any of these platforms based on their buyer network.
Traditional Payment vs TReDS System
| Factor | Traditional Payment Cycle | TReDS System |
| Payment Time | 30 - 90 days | Immediate after discounting |
| Collateral Required | Often required for loans | No collateral |
| Interest Rate | Fixed, bank-decided | Competitive bidding |
| Cash Flow Impact | Delayed liquidity | Faster working capital |
| Transparency | Limited tracking | Digital and Transparent |
Is TReDS Right for Your Business?
If you are:
- An MSME supplying to large corporates
- Facing delayed payments
- Struggling with working capital
- Looking for collateral-free funding
Then TReDS is not just helpful it’s strategic.
It improves cash flow without increasing your loan burden.
FAQs on TReDS
Is TReDS only for MSMEs?
Primarily yes. The seller must be an MSME. Buyers are usually large corporates or government entities.
Do MSMEs need collateral?
No. TReDS is completely collateral-free.
How fast is the payment process?
Once the invoice is accepted and discounted, funds are usually transferred quickly compared to traditional payment cycles.
Is registration mandatory for MSMEs?
No, but it is highly beneficial. However, companies with turnover above ₹250 crore must register.
Final Thoughts
Working capital is the oxygen of any MSME.
TReDS gives Indian businesses a structured, regulated way to unlock that oxygen without loans, without collateral, and without chasing payments.
If you’re an MSME owner, understanding and using TReDS could significantly improve your cash flow cycle.
Need Help Registering on TReDS?
At StartupFlora, we help MSMEs with compliance, registrations, and financial structuring.
If you want assistance with TReDS onboarding or MSME advisory support, connect with our team today and let’s simplify your growth journey.
Disclaimer
This content is published for general informational purposes only and should not be considered as legal, tax, financial, or professional advice. StartupFlora acts as a consultative and informational platform and does not guarantee any outcome, approval, registration, or result. Government rules, regulations, and interpretations may change, and outcomes depend on multiple external factors. Readers are advised to verify information from official sources and seek professional advice where necessary.