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Access to finance and working capital is a critical MSME challenge, and with the TReDS platform this is what the government aims to solve. TReDS full form is Trade Receivables e-Discounting System. It is an online digital platform that facilitates bill or invoice discounting for MSMEs. This enables MSMEs to have access to finance and borrow funds against their approved invoices from large organisations, solving challenges of cash crunch and delayed payments. Currently, there are three RBI approved TReDS platforms in India. Let’s understand the meaning of TReDS, who can use TReDS, how it benefits MSMEs, and more.

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What is TReDS?

TReDS full form: Trade Receivables e-Discounting System

TReDS is a digital platform that enables small scale businesses to get access to funds quickly. MSMEs can sell their trade receivables (invoices) to financers/lenders and get access to funds for daily working capital. It ensures transparency, reduces processing time, and accelerates the payment cycle. It also reduces challenges of delayed payments that often impacts business operations for MSMEs.

What is the concept of TReDS?

TReDS platform in India is instrumental in bridging challenges of liquidity and cash crunch that MMSEs struggle with. It is an online electronic platform and enables MSMEs to factor their invoices or trade receivables through discounting of invoicing. Put simply, the TReDS portal allows MSMEs to unlock the value of their receivables quickly and efficiently.

For instance, when an MSME (e.g., Company M) sends an invoice to its customer (Company C), there’s a 45-day window for the customer to clear the invoice (i.e., the 45-day payment rule for MSMEs). During this time, if Company M needs funds, it can approach the TReDS portal and get funds against the approved invoice at a discounted amount.

This enhances the operational capabilities through smooth cash flow, highlighting the benefit of TReDS platform for MSMEs in India.

TReDS platform

*Image for representation only. Not actual.

How does TReDS platform work?

As an MSME business owner, before you approach TReDS portal for funds, it’s important to understand how it functions. Here’s a step wise guide for the same.

Step-by-step on how TReDS work:

  • Registering on TReDS platform: The first step is to register on the TReDs platform for both MSMEs (seller) and financers. Required documents have to be submitted for verification. Post verification one can access the platform.
  • Uploading invoice: Next, MSMEs will have to upload their approved invoices on the platform, i.e., for goods or services provided to large organisations. (Known as Factoring Units)
  • Auctioning invoice: Once the invoices are uploaded, the different financers/lenders can auction for it, i.e., financers can bid to buy the invoices at a competitive price based on the credit profiles at a discounted amount.
  • Approving invoices: The business/corporation on whom the invoice is drawn or the ‘buyer’ will then have to approve or confirm the invoice on the TReDS platform, giving the invoice legitimacy.
  • Financing the sum: Post approval, the MSME can select the financing option that best suits their needs. The discounted bill amount, payment terms and other details can be discussed at this stage. The payment is then made to the MSME directly.
  • Repaying the amount: On the pre-determined date, the corporation (i.e., the buyer) repays the invoice amount directly to the financer on the TReDS platform.


Company M (MSME) has an invoice of ₹5,00,000 for Company C (large corporate) and uploads the invoice on the TReDS portal. Different financers will auction for financing the invoice at a discounted sum (e.g., 90% financing or ₹4,50,000 at 2% interest rate per month; 85% financing or ₹4,25,000 at 1.75% interest rate per month, etc.). Once Company C confirms the invoice, the MSME can select the best offer based on the amount and other conditions (in this case, Company M can opt for 85% financing at 1.75% interest rate per month).

Who can use TReDS?

We’ve taken a look at TReDS full form and how it works. Now, let’s understand who can use TReDS portal.

TReDS portal participants:

There are namely 3 participants of the TReDS platform: Sellers, Buyers and Financers

  • Sellers: These are the micro, small and medium enterprises (MSME) on the TReDS platform. They can upload invoices on the platform and get funding against them quickly. Bill discounting, invoice financing or factoring is the method used here.
  • Buyers: These are the corporates, PSUs, government departments and other business entities registered on the TReDS portal. They can use the portal to manage payables efficiently, by ensuring that they approve invoices promptly for their suppliers (MSMEs) to have access to funds. This source of supply chain financing will ensure that there is operational ease and no challenges in the supply chain.
  • Financers: These are the banks and NBFCs participating in the TReDS process as a lender. They bid for the invoices and provide the funds necessary to MSME sellers. This method of short-term financing is given at a small discount or interest rates keeping the process transparent and secure. (Also read: Short terms business loans)

Who is eligible for TReDS?

As explained, MSME businesses, large corporates, PSUs, government departments and other business entities, and financing institutions such as banks and NBFCs are eligible to register and participate in TReDS portal.

MSMEs are Sellers and can sell their invoices at a discounted amount to the Financers; large corporations and others are the Buyers and will have to approve the invoices for legitimacy; banks and NBFCs are the Financers and will provide funds to the MSME suppliers (at discounted amount) and collect the payment directly from the Buyer.


How many TReDS platforms are there in India?

In India, currently there are 3 TReDS platforms that are approved by the Reserve Bank of India. These are:

  • Receivables Exchange of India (RXIL)
  • Invoicemart (A.TReDS Ltd.)
  • M1xchange (Mynd Solutions Pvt. Ltd.)

Which platform is RBI approved for TReDS?

Receivables Exchange of India (RXIL), Invoicemart and M1xchange are the three RBI approved TReDS platforms that operates in India.

Receivables Exchange of India is a joint venture between SIDBI and NSE; Invoicemart is a joint venture between Axis Bank and mjunction services and was founded in 2017; M1xchange by Mynd Solutions Pvt. Ltd. was established in 2015 and has several reputed investors.

What are the benefits of TReDs?

There are benefits of the TReDS portal that resonate across the Indian economic landscape and enhances operations and financial conditions for MSMEs and other stakeholders.

Benefit to Sellers (MSMEs):

  • Quick access to finance by selling their invoices (trade receivables)
  • Reduced working capital challenges and cash crunch
  • No more delayed payments from customers (here customer/Buyer pays directly to the Financer)
  • Finance without recourse to the MSME seller (as per RBI guidelines), that is, MSMEs do not have to pay if there’s delay in payment by the Buyer
  • No need to follow up with customers for timely payments
  • Transparent process for the MSME supplier and low turnaround time (compared to loans, overdraft and other business finance sources)
  • Competitive bids on invoices driven by an auction system on the TReDS platform ensuring that MSME suppliers can select the best offer from different financers
  • No collateral required to be provided as security

Benefits to Buyer (Corporates and Government PSUs/departments and other entities):

  • Better management of supplier relationships
  • Payment directly to the Financer in a timely manner without affecting their cash reserves (Note: As per Section 43B(H) of the Income Tax Act, all payments to MSMEs must be made within 45 days)
  • Efficiency and continuity in the supply chain (with Financers providing supply chain finance to MSMEs for business continuity)
  • Strengthen supply chain operations and business relationships

Benefits to Financers (banks and NBFCs):

  • Low risk of lending (as Corporates confirm the invoices)
  • Profitable and quick returns as Financers fund a part of the invoice amount (usually 80% to 95%) and charge a factor fee (usually 0.5% to 3% per month) for the duration of the payment
  • Diversify their portfolio across different industries

TReDS meaning

TReDS boosts the efficiency of the supply chain ecosystem. It makes it easy and quick for MSMEs to get funds and keep business operations running. It also enables to build a robust financial ecosystem and strengthens supply chain. Each participant benefits by being a part of the Trade Receivables e-Discounting System.

What are the documents required for TReDS registration?

When registering on the TReDS portal you will need some documents. These are:

  • Application form filled in
  • KYC details of the applicant and the authorised signatories (for instance, PAN card, Certificate of Incorporation, Address Proof of the Registered entity etc.)
  • Bank documents and confirmation letter
  • Agreement documents

In general, TReDS is a paperless online platform that makes it easy for MSMEs to borrow funds against their invoices.

At Tata nexarc we understand the challenges MSMEs face. We have built a digital platform for MSMEs and have partnered with leading sellers and service providers to offer affordable and reliable solutions to MSMEs. You can buy steel at the best prices, get PTL logistics services across multiple destinations, and find relevant government tenders. To know more, register now on Tata nexarc.

Sohini Banerjee

Sohini is a seasoned content writer with 12 years’ experience in developing marketing and business content across multiple formats. At Tata nexarc, she leverages her skills in crafting curated content on the Indian MSME sector, steel procurement, and logistics. In her personal time, she enjoys reading fiction and being up-to-date on trends in digital marketing and the Indian business ecosystem.