TReDS is a mechanism to facilitate the discounting of invoices for MSMEs from corporate buyers through multiple financiers.
Hyderabad: Bill discounting platform M1xchange said it will tap the MSME segment in Telangana and Andhra Pradesh for its ‘Trade Receivable by M1xchange’ product. TReDS is a mechanism to facilitate the discounting of invoices for MSMEs from corporate buyers through multiple financiers. M1xchange aims to offer liquidity within 24-72 hours online to micro, small and medium enterprises (MSMEs).
TReDS addresses the issue of challenges of delayed payments to MSMEs. Invoices raised by MSMEs accepted by corporate buyers are funded at market-determined interest rates using an auction method in which multiple financial institutions bid. This financing is without any collateral or security and without recourse to the MSMEs.
“The cost of funding outside the banking system is high for MSMEs. With M1xchange TReDS, MSMEs will be able to utilise the platform for receivables discounting from their corporate buyers, company said in a release. It recently introduced new `small to small’ trade receivables on a trial basis to enable cash flow-based credit analytics of MSME buyers instead of the traditional balance sheet-based risk assessment approach.