M1xchange TReDS is a digital marketplace to sell the receivables to banks/NBFC set up under the approval of Reserve Bank of India (RBI) to facilitate the discounting of invoices and bills of exchange on a PAN India basis.
The client is a successfully run spice manufacturing and exporting company with its roots embedded in India. The company has six manufacturing facilities in Kerala, Tamil Nadu, Andhra Pradesh and Uttar Pradesh. It has now established a strong presence in 13 states across India with a huge network of local vendors. It also derives revenues from overseas markets of Middle East, the US, Australia and the UK through exports. It has established itself as a household name when it comes to spices.
Late payment, even non-payment, of dues to the MSME sector is rampant. This increased manifold when the Covid crisis hit the economy. To address the issue the Government enacted several laws and started “Samadhan” portal to monitor delayed payments to MSMEs. What the Samadhan portal has revealed is the huge sum that remains unpaid to MSMEs who approached the portal for redressal. There are 98666 applications filed by MSMEs to the portal.
The invoice financing method speeds up vendor payments without causing any disruptions in the balance sheet of any stakeholders. Moreover, TReDS gives this flexibility to the suppliers to choose the best factoring companies on diverse parameters such as transparency, customer confidentiality, factoring rates & fees.
Many small and medium businesses operate through a credit system to keep up goodwill with their customers. However, if 9 out of 10 transactions happen on credit, it will put the business on a tight spot in terms of cash flow. It may further affect your inventory purchase and payment of rent and salaries to the staff. One way to handle the situation is to get financing on your business’s account receivables.
The five largest bill discounting firms in India will be listed in today's post. Before we get started with the list, let's go through what bill discounting is.
Invoice discounting is a method of borrowing short-term cash from financial institutions or banks in exchange for outstanding invoices. This enables the company to get short-term loans to meet its short-term financial requirements.
In the Indian financial sector, businesses can access a variety of external finance options. The number of institutional sources of finance has also expanded dramatically over the previous ten years. To meet their funding needs, businesses can now turn to a variety of financiers, including investors, banks, NBFCs, and fintech firms.
Trade receivable financing is a financial tool that helps small- and medium-sized businesses manage their cash flow. It's often used by companies that sell to other businesses, but it can also be used by any interaction with a customer who owes them money but is late on payments. Trade receivable financing allows you to take advantage of those unpaid balances and receive cash up front instead of waiting for payment from your clients.
When it comes to running a business, one of the biggest challenges you'll encounter is obtaining the working capital needed to keep your company moving forward. Bank loans can be difficult for small businesses to obtain and often require collateral or personal guarantees which may not be desirable for some companies.
