Why TReDS Is the Future of Invoice Financing in India

Why TReDS Is the Future of Invoice Financing in India

Being a part of or running an MSME is not for the weak, there are several challenges that they face daily. But there’s one challenge that has been persistent for them for a while now: accessing timely and affordable working capital. Long payment cycles, limited access to formal credit mechanisms and delayed receivables constrain their growth. However, after the introduction of TReDS, things have been much better for MSMEs. By offering a secure, digital, and RBI-regulated route to unlock the cash flow through invoice financing, the narrative of offerings has been changed.  

Having ₹11.5 lakh crore worth of invoices being financed through TReDS, the ecosystem has taken a good turn and has transformed into a transparent and inclusive model for MSME finance.  

Here's everything one needs to know about why TReDS is the future of invoice financing in India, how businesses can register on the same and why platforms and organisations like M1xchanhe can be the right choice for it.  

What is TReDS?
TReDS stands for Trade Receivables Discounting System. It's an initiative by the Reserve Bank of India to enable MSMEs to receive due payments against their trade receivables from large corporates, public sector undertakings (PSUs), and government departments through digital invoice discounting.   

With the TReDS bill discounting, all MSME suppliers have to do is upload their approved invoices on a digital platform, where financiers such as banks and NBFCs bid to finance the invoice at competitive rates. Once the best offer is selected, the supplier receives funds instantly, while the financier will receive the payment from the buyer on the invoice’s due date.  

Why TReDS is Transforming Invoice Financing? 

Bridging the MSME credit gap 
Nearly 30% of India’s GDP is contributed by the MSMEs here, but they face a credit gap of over 25 lakh crore INR. TReDS directly addresses this gap by assisting these enterprises with collateral-free, low-cost working capital through invoice discounting.  

So instead of waiting for 60-90 days for buyers to release payments, MSMEs can easily access funds within 24-48 hours of invoice approval via the TReDS bill discounting.   

2.100% Digital, transparent, and secure  

With traditional bill discounting, MSMEs often navigate complex documentation, offline processes and inconsistent approval timelines. The TReDS platform streamlines this by providing:  

• Digital invoice upload and approval process. 

• Real-time bidding from multiple financiers. 

• Instant fund disbursal upon acceptance. 

• Audit-ready transaction trail. 

• Data security and regulatory compliance. 

The entire process, from the TReDS registration to financing, is conducted online, from scratch, ensuring speed and transparency.  

3. Financing on a “Without Recourse” basis  

Under RBI guidelines, all transactions on the TReDS platform are conducted without recourse to the MSME supplier. This means if the buyer defaults, the supplier to access funds even if they lack strong financial statements or credit scores.  

TReDS Registration: How to Get Started? 

Organisations like M1xchange make joining a TReDS platform simple and MSME-friendly. Here’s how you can get started: 

Step 1: Contact the platform 
Visit the website and submit an interest form, or you can also reach out to the M1xchange team directly.  

Step 2: Submit documents 
Here’s a list of documents that are typically required: 

• PAN and GST certificate

• MSME registration 

• Cancelled cheque

• KYC of authorised signatories

• Board resolution or partnership deed

Step 3: KYC and onboarding 
Once the document verification and compliance checks are done, your organisation will be successfully onboarded to the platform.  

Step 4: TReDS login 
Once registered, you will receive your TReDS login credentials. You can then upload your invoices, monitor bids, and track payments, all from a secure dashboard.  

The registration process usually takes a few working days, depending on the documentation and KYC completion.  

Why M1xchange is the Preferred TReDS Platform?
M1xchange is a pioneering RBI-licensed TReDS platform, has been at the forefront of revolutionising MSME finance since 2017. Having a wide growing network of MSMEs, corporates, PSUs, and financiers, here’s what M1xchange offers:  

• Nationwide coverage for suppliers across India. 

• Over 50 banks and NBFcs are competing for invoice financing. 

• User-friendly interface for quick upload, bidding and settlement. 

• End-to-end digital documentation and customer support. 

• Strong data security and transaction integrity. 

The platform supports a variety of industries, from manufacturing and logistics to services and agri-processing, ensuring sector-wide impact.  

TReDS is not just an invoice discounting tool, it's a game changer for MSMEs seeking sustainable, affordable and secure access to finance. As more businesses adopt digital trade finance solutions, the relevance of platforms like M1xchange will only increase.