How TReDS Helps You Grow & Stay Compliant?

In today’s fast-paced business environment, ensuring timely payments to vendors, especially MSMEs, is no longer just good practice, but a compliance requirement. As working capital constraints tighten and regulatory scrutiny increases, large enterprises must rethink how they finance their supply chains. One of the most powerful tools available to them is the Trade Receivables Discounting System (TReDS)—a game-changer in MSME financing that’s rapidly transforming B2B payments in India.

What Is TReDS and Why Is It Gaining Traction?

TReDS, or the Trade Receivables Discounting System, is an RBI-regulated platform designed to help MSMEs access early payments against their invoices through institutional financing. These platforms allow suppliers (MSMEs) to upload invoices, which can then be discounted by multiple financiers, giving them access to working capital without needing collateral.

This setup is digital, transparent, and real-time—replacing traditional methods of invoice financing that are often slow, complex, and biased toward large vendors. With increased government backing and the rising demand for financing flexibility, adoption of TReDS is growing swiftly.

Why does the RBI Introduce TReDS?

The Reserve Bank of India (RBI) introduced TReDS to bridge the liquidity gap between large buyers and small suppliers. MSMEs often face long payment cycles that strain their cash flow and limit their ability to grow. TReDS solves this problem by enabling timely payments, unlocking capital stuck in receivables.

RBI not only regulates these platforms but has made it mandatory for all companies with a turnover of ₹250 crore or more to onboard TReDS.

How TReDS Works?

• An MSME supplies goods/services to a large buyer
  
  
• The invoice is uploaded to a TReDS platform (like CashFlo)
  
  
• The buyer accepts the invoice digitally
  
  
• Multiple financiers bid to discount the invoice
  
  
• The MSME gets paid early at a discounted rate
  
  
• The financier collects payment from the buyer at maturity

This seamless process benefits both the supplier and the buyer without requiring any collateral.

TReDS vs Traditional Banking Channels

Traditional invoice financing routes involve tedious paperwork, fixed rates, and limited access. Banks may not finance invoices unless they meet stringent credit checks, often excluding small vendors. In contrast, TReDS democratizes access to liquidity. Vendors get control over timing, rates, and invoices, while buyers benefit from dynamic discounting and stronger vendor relationships.

Do You Need Collateral to Use TReDS?

No, and that’s one of the biggest advantages. TReDS is a completely unsecured financing model. Since invoices are backed by the buyer’s creditworthiness and approved digitally, MSMEs don’t need to pledge assets or go through traditional credit underwriting.

What the 2025 Mandate Means for Enterprises?

The March 31, 2025 deadline for TReDS registration has already passed. If your company has a turnover above ₹250 crore and is not yet registered on a TReDS platform, you may now face compliance issues.

Missing this requirement can lead to penalties under Section 43B(h) of the Income Tax Act. This includes disallowance of business expenses and damage to your company’s reputation.

Now is the time to act, get compliant and support timely payments to MSMEs.

Top Benefits of TReDS for Enterprises and MSMEs

• Faster payments to MSMEs
  Vendors get paid in days, not months, reducing stress on working capital.
• Improved liquidity for both parties
  Buyers can stretch payable cycles, and vendors can shorten receivable cycles.
• Better supplier relationships
  Timely payments build trust and vendor loyalty.
• No debt on books
  Since this is a discounting model, it doesn’t add debt to the supplier’s balance sheet.
• Zero IT lift
  With platforms like CashFlo, deployment is plug-and-play with no tech overhaul required.

Common Mistakes Enterprises Make with TReDS

• Not onboarding all vendors, especially small-ticket ones
• Not communicating the benefits clearly to suppliers
• Choosing platforms with rigid discounting rules
• Failing to track ROI or vendor participation rates

How CashFlo Enhances TReDS for Maximum Impact?

CashFlo has reimagined how enterprises engage with TReDS. Unlike traditional platforms, CashFlo gives buyers and vendors full flexibility and visibility.

Here’s how CashFlo stands out:

• 60-day payable extension at just 3.96% p.a.
  
  
• Full vendor control on invoice selection, rates, and timelines
  
  
• Anonymous deployment with real-time ROI tracking
  
  
• Dedicated enablement teams for driving vendor adoption
  
  
• Zero IT lift for enterprises

Smart Use Cases: More Than Just Discounting

TReDS isn’t just for meeting mandates it can be a strategic financial tool:

• Overcome payment delays using smart liquidity models
• Achieve credit arbitrage by extending credit periods while maintaining vendor cash flows
• Enable interest cost subvention with AI-driven discounting
• Explore beyond TReDS with new-age embedded finance solutions

Why Now Is the Best Time to Act

• The 2025 mandate is fast approaching
  
  
• Cash-strapped vendors are looking for faster payment options
  
  
• Finance teams are under pressure to optimise working capital
  
  
• Compliance isn’t optional anymore it's a reputational and financial risk

With platforms like CashFlo, enterprises can turn regulatory compliance into a strategic advantage, boosting supplier trust, improving margins, and staying ahead of the curve.

Conclusion

TReDS is here to stay and it's reshaping how businesses manage working capital and supplier relationships. For large enterprises, this is a moment to not just comply, but to lead.

If your current TReDS or vendor discounting setup isn’t delivering results, it’s time to explore a better solution.

Ready to transform your vendor financing strategy? Book a demo with CashFlo