MSMEs and Large Corporates will enhance Working Capital by M1xchange

Udaipur : Large numberof MSMEsare benefitting from the introduction of collateral-free special products known as “TReDS” by M1xchange, India’s leading trade receivables discounting system (TReDS). The platform is designed to provide liquidity to MSME sellers in the state within 24hours through online bidding mechanism from multiple financiers. This is a highly effective and efficient solution for the credit gap of MSMEs in India. This information was given by M1 Exchange Senior Director Sales Kaustubh Srivastava and Regional Head Corporate Sales Rishabh Natani in a press conference held at Hotel Rajdarshan on Tuesday.

With 55 banks and NBFCsMSMEscan register on M1xchange to get their invoices financed digitally without any hard collateral or security and without any recourse fee and in return corporates reduce their input cost due to the availability of TReDS to their MSME seller at much lower interest rates.

TReDS is an innovative system conceived and regulated by Reserve Bank of India (RBI) that enables financing to Micro, Small & Medium Enterprises (MSME) at competitive rates to address the challenges of delayed payment to MSMEs. Invoices raised by MSMEsaccepted by corporate buyer are funded at market determined interest rates using an auction method in which multiple financial institutions bids. This also helps business to payoff their dues before due date which helps them to negotiate better with their supplier resulting in receiving the goods and services at much lower price.

M1xchange, known for its Trade Receivables platform is supporting the growing number of MSMEs. across several industries such as Manufacturing, Infrastructure, Agriculture, Steel, Power, Chemicals, Dairy,  etc. These Industry sectors are also major employment providers and add to the country’s GDP significantly. Solving their Working Capital needs will allow both MSMEs and Large corporates to expand globally and prosper in business rapidly. 

M1xchange has also signed MOU with the Ministry of MSME for Udyam portal, MSMEs will benefit from a two-way exchange of information between Udyam portal and M1xchange. All Udyam registered MSMEs will be able to onboard on M1xchange with an easy convenient process enabling them to leverage the full force of TReDS and access liquidity at the lowest possible cost in the country.

“There will be an increase in the number of non-banking finance businesses (NBFCs) joining in the current fiscal year. This could encourage platform growth in addition to the potential for IRDAI-approved trade credit insurance to take off (currently awaiting RBI rules). Additionally, he said that the industry is adopting TReDS at an exponential rate because it adds value for both large corporations and its SME clients. Platform as a concept has been widely adopted, which is beneficial to us. Our goal is to lower transaction costs for both suppliers and buyers while assisting SMEs in receiving their receivables more quickly.” said a spokesperson from M1xchange.

M1xchange has started ‘Small-Small Factoring’ product under the Reserve Bank of India’s (RBI’s) third cohort. The product aims at facilitating ‘early liquidity’ for MSME buyers and sellers. The product is likely to help address over $750-billion credit gap for MSMEs in India.