Tag: TReDS

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M1xchange Surpasses INR 1,00,000 Crore in Invoice Discounting Throughput

Jun 1, 2024 by Mansi Praharaj 0 Comments #EY report, #M1xchange, #Sundeep Mohindru, #TReDS

New Delhi, 1st June, 2024: M1xchange, India’s leading invoice discounting platform has reached a significant milestone by surpassing ₹1,00,000 crore in throughput value. This highlights the platform’s crucial role in transforming the landscape of alternative financing for small businesses across the country.

Sundeep Mohindru, Promoter & Director, M1xchange - 1

M1xhange, India’s leading TReDS (trade receivables discounting system) platform is the first to successfully expand the scope of TReDS through Small-to-Small (S2S) financing. This initiative effectively bridges the credit gap and integrates tier 2 and tier 3 MSMEs into the formal credit ecosystem, significantly contributing to their growth and sustainability. S2S financing has broadened the scope of TReDS platform, enabling more banks and NBFCs to engage with underserved MSMEs, which fosters economic development at a grassroots level.

Invoice discounting via TReDS experienced a significant upsurge in 2023 driven by adoption among MSMEs, corporates, and banks. Sundeep Mohindru, Promoter & Director, M1xchange, said, “From the very beginning, our vision was to transform access to working capital through digitization and innovation. This milestone is significant, but it merely scratches the surface of the vast opportunities ahead. By facilitating credit through competitive interest rates, prompt disbursals, and streamlined processes, we are creating immense opportunities to boost MSME growth in India.”

According to an EY report, the MSME sector in India has a staggering credit gap of $530 billion. Among the 64 million MSMEs in the country, only about 14% have access to formal credit. M1xchange aims to bridge this gap by reducing financing costs for both corporate buyers and MSME sellers.

Showcasing a consistent 100% year-on-year growth, M1xchange discounted invoices worth INR 43,000 crores in FY24 compared to INR 23,100 crores in the previous fiscal. This impressive growth in transaction volume is attributed to the increasing acceptance and understanding of TReDS among businesses. The platform has witnessed 100% month-on-month increase in registrations from corporates and MSMEs alike, recognizing the efficiency and cost-effectiveness of TReDS. Additionally, M1xchange has also signed up MOU with numerous state governments, including Maharashtra Haryana, Goa, Madhya Pradesh and Tamil Nadu to offer liquidity to the state’s MSMEs while ensuring timely payments at a competitive rate.

TReDS also benefits financiers on the platform with timely repayments and negligible defaults. Banks now have opened credit sanctions to BBB-rated corporates, benefiting MSME sellers of these corporates by enabling them to realize their payments digitally in advance. Further the cost of financing on TReDS is reduced by 5-8%, significantly lowering the business expenses for MSMEs. These savings are passed on to corporate customers, incentivizing both parties to adopt TReDS.

PHD chamber of commerce
Business World

TReDS a good alternate source of funding for MSMEs: Say experts at PHDCCI Video Conference

Aug 29, 2020 by Gouri Achary 0 Comments #Dr. H P Kumar, #Mr. Anil Khaitan, #Mr. Mohit Jain, #Mr. Raphael, #Mr. Sanjeev Chawla, #MSMEs, #PHD Chamber of Commerce, #Trade Receivables Discounting System, #TReDS

“TReDS a good alternate source of funding for MSMEs,” said experts while deliberating at a Video Conference on Trade Receivables Discounting System organized by PHD Chamber of Commerce and Industry (PHDCCI) here today. It was observed that TReDS allows MSMEs to receive money upfront which helps them to resolve their working capital problems, creating room for a more productive and financially sound business environment.

Welcoming the speakers and participants, Mr. Mohit Jain, Chairman, Haryana State Chapter, PHDCCI said that MSMEs are the backbone of Indian Economy and despite the important role played by them in country’s overall economic growth, they continue to face constraints in obtaining adequate finance, particularly in terms of their ability to convert their trade receivables into liquid funds. TReDS offers a promising platform for solving their working capital issues and in today’s program, experts shall highlight the benefits of this platform.

Presenting the Industry perspective Mr. Anil Khaitan, Former, President and Mentor, PHD-MSME Mentoring & Guidance Centre stated discounting receivables can be a good source of finance for the cash-starved MSMEs, particularly because it is off-balance sheet finance. He said that although the Government had mandated all big Corporates and Central Government PSUs to register on TReDS platform but very few of them have come on board on this platform.

Mr. Khaitan welcomed RBI’s step to classifying TReDS as a priority lending sector. He suggested that automation can be a solution for delayed payments on TReDS platform as the invoice seller will automatically receive the payment on time.

In his Key Note Address, Dr. H P Kumar, Former CMD, NSIC and Advisor, PHD Chamber said that although more than 1.3 crores enterprises are registered under GST the number of companies availing services of TReDS platforms is very low. The reason for this could be lack of awareness. He said that negligible number of PSUs and big corporate for registered as buyers on this platform because the registration fee is very high. The requirement of credit rating and a turnover of more than Rs. 500 corers to register on TReDS platform are also holding back many buyers.

Mr. Kumar mentioned that RBI has given licenses to only three entities to run TReDS platform which
inadequate considering the size of our country and gives access to very limited number of companies.

Mr. Kumar informed that MSMEs can take assistance from the Chamber’s PHD-Mentoring and Guidance Centre on various issues ranging from project conceptualization, training, funding resources etc.

Mr. Jacob Raphael, COO, M1xchange made a presentation on Registration and Benefits of TReDS Scheme. While explaining the process of discounting invoices, he informed that the Trade Receivables Discounting System (TReDS) is a digital platform that allows small businesses to get access to working capital by auctioning their trade receivables. On this electronic platform for auctioning of trade receivable, a financier (bank or NBFC) bids for a bill (trade receivable) from a seller (SME) before its due date or before the buyer makes the payment on the bill.

Mr. Raphael said that to ease the TReDS platform registration process, M1xchange has simplified the steps of onboarding. A user can simply fill a small form by clicking here and can register on the TReDS platform with one-time documentation.

Explaining the bidding process on M1xchange, Mr. Raphael informed that the Supplier raises the invoice and the Buyer verifies the same. This enables the financiers which are also the invoice factoring company to bid against the verified invoice. Once the supplier accepts the bid, the payment is processed and credited to the supplier’s account.

The financier offers credit to the seller at a discounted rate of interest which is generally 5% less than banks and other sources. In this process, the seller may get a steep discount on the rate of interest for working capital, without the need of any collateral security. He said M1xchange is gaining popularity and now many Indian and Foreign Banks are its active partners.

Sharing the Government of India Initiatives on TReDS, Mr. Sanjeev Chawla, Director, MSME-DI stated that TReDS is a good mechanism for MSMEs to fulfil their liquidity requirements. He informed that GOI is trying to disseminate information regarding this useful platform. He mentioned that the Government has launched a CHAMPION Portal to empower MSMEs and address their grievances. Besides this the MSME Samadhan Portal is also available for realizing the delayed payments of SMEs from both public and private buyers.

Mr. Chawla invited suggestions from the MSMEs for further improving the TReDS platform. Thanking the speakers and participants, Adv Lokesh Jain, Chairman, MSME Committee, Haryana State Chapter, PHDCCI assured Mr. Sanjeev Chawla that PHDCCI will collate and forward all the suggestions and grievances received from the participants to the Government for necessary action.