Benefits of TReDS for MSME Suppliers

Small businesses are crucial to India's economy, contributing significantly to GDP and employment. However, one of the biggest challenges they face is delayed payments from corporate buyers, which strains their cash flow and working capital. Traditional financing methods, such as bank loans or invoice discounting, often have high-interest rates and strict collateral requirements, making affordable credit challenging to obtain. 

How TReDS Works for MSME Suppliers

TReDS operates as an online platform connecting MSME suppliers, corporate buyers, and financiers. Here’s a step-by-step process:

• Invoice Upload: The MSME supplier uploads an invoice on the TReDS platform after delivering goods or services to the buyer. 
• Buyer Approval: The corporate buyer verifies and approves the invoice for financing. 
• Financier Bidding: Multiple financiers, including banks and NBFCs, bid on the invoice to offer competitive discounting rates. 
• Early Payment Disbursal: The supplier selects the best offer and receives the discounted payment within 24-48 hours. 
• Buyer Repayment: The buyer settles the invoice with the financier on the due date, extending its own credit cycle without affecting supplier cash flow. 

Key Benefits of TReDS for MSME Suppliers

1. Faster Payment Realization

MSME suppliers often struggle with payment delays, which can extend beyond the mandated 45-day period. TReDS eliminates this issue by enabling early invoice payments within 24-48 hours, ensuring smooth business operations.

2. Collateral-Free Financing

Unlike traditional bank loans, TReDS-based financing does not require suppliers to pledge assets. The invoice itself serves as collateral, reducing financial risk and simplifying access to funds.

3. Competitive Discounting Rates

With multiple financiers bidding for invoices, MSMEs receive the best possible discounting rates, making it a cost-effective alternative to conventional loans.

4. Reduced Dependence on Costly Loans

MSMEs often rely on high-interest working capital loans to bridge cash flow gaps. TReDS provides a more affordable financing option, allowing suppliers to access funds without burdening their balance sheets.

5. Improved Creditworthiness

Timely payments through TReDS enhance the financial stability of MSMEs, improving their credit scores and making it easier to secure future funding from banks and financial institutions.

6. Ensured Payment Security

TReDS transactions are regulated by the RBI, offering suppliers legal protection and peace of mind in financial dealings.

Regulatory Compliance & Legal Protections

The MSME Development Act mandates that large enterprises must pay MSME suppliers within 45 days. Delayed payments can lead to legal consequences and financial penalties. TReDS helps both suppliers and buyers comply with these regulations by ensuring timely payments through a structured and transparent mechanism.

Additionally, TReDS platforms are regulated by the RBI, ensuring that transactions are secure, legally binding, and free from risks associated with traditional credit arrangements.

Why MSME Suppliers Should Adopt TReDS Now

1. The Future of Digital Financing for MSMEs

TReDS is reshaping B2B transactions through digitization and automation. As TReDS adoption grows rapidly, MSMEs that onboard early gain a competitive advantage in managing working capital.

2. Integration with Large Corporations

Many leading enterprises have already adopted TReDS to facilitate early payments while extending their credit periods. MSMEs that onboard onto TReDS can build stronger relationships with large buyers and improve their financial stability.

3. Encouragement from Government & Financial Institutions

The Indian government actively promotes TReDS as a solution for MSME financing. Banks and NBFCs are increasingly participating in TReDS platforms, making it easier for suppliers to access funds at competitive rates.

How CashFlo Enhances MSME Benefits on TReDS

CashFlo, India’s leading supply chain finance platform, offers unique advantages to MSMEs using TReDS:

• Extended Payables up to 180 Days: Buyers can extend payment cycles while suppliers receive early payments.
• Largest Marketplace of Lenders: MSMEs can access funds from banks, NBFCs, and institutional investors at the lowest rates.
• Guaranteed Cost Savings: Built-in 2% subvention on early payment rates negotiated with financiers.
• MSME Compliance: Ensures adherence to the 45-day payment mandate under the MSME Act.
• End-to-End Vendor Engagement: CashFlo’s PMO team assists suppliers in onboarding and managing transactions seamlessly.

With over 1,500 enterprises and 3,00,000+ suppliers onboarded, CashFlo has facilitated ₹24,000Cr+ in invoices, helping MSMEs optimize cash flow, reduce financing costs, and strengthen supplier-buyer collaboration.

Conclusion

TReDS is transforming MSME financing by providing faster, collateral-free, and cost-effective funding solutions. By reducing payment delays and enhancing financial security, TReDS enables MSMEs to focus on business growth rather than cash flow concerns.

For MSME suppliers, adopting TReDS is no longer an option—it’s a necessity for staying competitive in today’s evolving financial landscape. Platforms like CashFlo further enhance these benefits by providing seamless access to working capital, regulatory compliance, and cost savings.

Are you an MSME supplier facing cash flow challenges? Join a TReDS platform now and leverage CashFlo’s financing solutions to secure early payments and fuel business growth.