TReDS platform enables factoring of MSME invoices by financiers and eventually settles the invoice amount with the buyer on due date.
- Upon receiving PO (Purchase Order) from the buyer, MSMEs deliver the goods and generates a ‘factoring unit’ (e-record of invoice details) on TReDS.
- The buyer should verify and accept the factoring unit created by MSME seller on the TReDS platform.
- Based on the buyer’s profile, TReDS predefines time frame for financiers to offer their bid for the factoring unit. The amount quoted by financiers is visible only to the MSME, who can choose and accept any favourable bid.
- As and when an MSME accepts the bid, the factoring unit is tagged as ‘financed’ and financiers are notified. The discounted bill amount gets deposited in the MSME’s account on T+1 or T+2 basis (one or two business days after acceptance based on the platform).
Factoring of Receivables - Traditional Model