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TReDS

TReDS

TReds - Trade Receivable e-Discounting System

Trade Receivables Discounting System is a welcoming step by the RBI to regulate the trade receivables between MSMEs, large corporates, and financiers. TReDS is an institutional mechanism set up in order to facilitate the financing of trade receivables of MSMEs from their respective corporate buyers through multiple financiers.
 
TReDS involves a digital mechanism having 3 stakeholders, the corporate buyer, the MSME supplier, and the financier. Being a completely digital platform, the transactions are 100% transparent and the overall administration cost for vendor financing, payments, and settlements are reduced lowering the overall cost of a trade.
TReDS - By Egniol

How TReDS work?

The process of bill discounting initiates with uploading of a valid invoice by the Supplier or Buyer depending on the type of factoring opts. Primarily there are two ways how Invoice discounting on TReDS work:
  • Factoring: Supplier bearing the interest
  • Reverse Factoring: Buyer Bearing the interest
TReDS - By Egniol

Factoring:

The process of Factoring starts when a Supplier uploads invoices on the TReDS platform. Once a valid invoice is uploaded, the buyer then checks the validity of the uploaded invoice and approves the same. Upon approval, the financiers start to bid on the invoice at discounted rates, the rate at which financiers place their bids depends on the buyer’s rating. The supplier then accepts the bid as per their discretion, upon acceptance payment is processed the next day, and the supplier’s account is credited with the discounted amount.

Reverse Factoring:

In Reverse Factoring valid invoice is uploaded on the system by the Buyer. The invoice then goes directly to the Financiers on the platform to start the bidding process. Once the financiers start to bid on the invoice the bids start getting visible to the supplier and the buyer. The buyer then accepts the bid. Upon acceptance, payment is processed the next day, and the supplier’s account is credited with the discounted amount.

At Egniol Services Private Limited, we help you with the complete consultancy and registration process on the appropriate platform.  We aim to provide a solution-based approach adept with innovation & flexibility towards financing solutions for stakeholders.  Contact us for a free virtual appointment.

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