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Treds

  May 07, 2020

Treds

Why in News?

The government has ordered its top companies (ONGC, Indian Oil, etc.) to bring in their entire vendor network comprising thousands of suppliers on to the TReDS as it aims to unclog the payment pipelines that’s squeezing funding for small enterprises.

Because of the delay in payments, small firms are not able to meet their working capital requirements and at the same time banks’ risk aversion has led to drying up of funds.

"All CPSEs must ensure that the payments to MSE vendor be made using online mode within the stipulated time period of the contract and not more than 45 days in any case,”

What is Treds?

TReDS refers to Trade Receivable Discounting System.

TReDS was being setup as per the RBI guideline issued in 2014. It is an online electronic platform and an institutional mechanism for financing / factoring of trade receivables of MSME Sellers against Corporate Buyers, Govt. Departments and PSUs.

What is Trade receivables?

Trade receivables are amounts billed by a business to its customers when it delivers goods or services to them in the ordinary course of business.

What are the objectives of Treds?

The main objective of the TReDS platform is to address the financing needs of MSMEs as well as the delayed payments issue.

Who can participate?

On this platform Sellers ( MSMEs), buyers and finances participate.

What are the advantages of Treds?

Following are the Salient Features of TReDS-Unified platform for Sellers, Buyers and Financiers, Eliminates Paper, Easy Access to Funds, Transact Online, Competitive Discount Rates, Seamless Data Flow, Standardised Practices.