How TReDS is revolutionising payments for MSMEs in India

Mumbai, Nov 14, 2024

Synopsis
The TReDS platform has significantly helped Indian MSMEs receive faster payments. It allows them to sell unpaid invoices to financiers at a discounted rate, providing quick access to working capital. This has been crucial for their growth, addressing the challenge of delayed payments from larger buyers.

A new online system is helping small businesses in India get paid faster, according to the Reserve Bank of India (RBI). The system, called TReDS, allows small businesses to sell unpaid invoices to banks and other financial institutions.

“TReDS has effectively bridged the credit gap by enabling MSMEs to promptly convert their trade receivables into liquid funds. This ensures that small businesses do not have to wait endlessly for payments,” said RBI Deputy Governor Michael Patra.

Small businesses often struggle to get paid on time by their larger customers. This delay can make it hard for them to pay their own bills and grow their businesses.

TReDS helps solve this problem by giving small businesses quick access to cash. This allows them to continue operating and investing in their growth.

The system has been a success, with the value of invoices financed through TReDS increasing significantly. The RBI also reports that around 5,000 financial technology companies are now using TReDS to help businesses manage their finances.

[The Economic Times]