TReDS: How Small Suppliers Can Get Paid in Days by Large Buyers

A small supplier to a large company may wait 60 to 90 days for money that it needs in 10. TReDS lets it sell the invoice to a bank or NBFC as soon as the buyer accepts it, at a rate based on the buyer's credit.

What TReDS is

A Trade Receivables Discounting System is an RBI-licensed online platform where:

1. the MSME supplier uploads an invoice;
2. the buyer accepts it on the platform;
3. banks and NBFCs bid to finance it;
4. the supplier accepts the best bid and gets paid, usually within a day or two;
5. on the due date, the buyer pays the financier.

The financing is without recourse to the MSME: if the buyer does not pay, the financier pursues the buyer, not the supplier.

Who must be on TReDS

A Gazette notification dated 7 November 2024 requires all companies with turnover above ₹250 crore, and all central public sector enterprises, to register on a TReDS platform. The deadline was 31 March 2025. The earlier threshold was ₹500 crore.

That gives MSME suppliers of thousands of mid-sized companies a right to ask: "Please accept our invoices on TReDS."

What it costs

• ✓The discount rate is set by bidding, and depends on the buyer's credit, not the MSME's. For good buyers it is often lower than an MSME's own borrowing rate.
• ✓Platform fees are modest.

A worked example

A Vapi micro chemical supplier sells ₹40 lakh a month to a ₹900 crore pharma company on 60-day terms. It registers on a TReDS platform, the buyer accepts the invoices, and banks bid around 8 to 9% a year. The supplier receives about ₹39.45 lakh within two days instead of ₹40 lakh after 60 days, and stops using its expensive overdraft.

How to start

1. Register on a TReDS platform with your KYC, Udyam certificate and bank details.
2. Ask your large buyers to register, if they have not, and to accept your invoices there.
3. Upload invoices as soon as you raise them.
4. Compare bids and accept.

Frequently asked questions

Sources

• ✓Companies with turnover above ₹250 crore must onboard TReDS, Taxmann
• ✓TReDS: Trade Receivables electronic Discounting System, TaxGuru

This is a summary, not financial advice.