A Complete Guide to TReDS: Benefits, Participants, and Registration Process

By Vibha
Posted On August 20, 2025

What is TReDS?

The Trade Receivables Discounting System (TReDS) is an RBI-regulated electronic platform designed to simplify the financing of trade receivables for MSMEs and other suppliers. It facilitates the discounting of invoices and bills of exchange raised by suppliers against buyers in the business ecosystem.

This mechanism enables suppliers to access instant working capital without the need for collateral, bridging the liquidity gap that delays business growth.

 The fully digital, transparent, and secure integration of the TReDS system resolves the persistent problem of delayed payments, which often strains the liquidity of small and medium-sized enterprises.

Key Benefits of TReDS

TReDS offers a range of advantages for all participants in the supply chain.

For Suppliers:

  • Quick Liquidity: Access funds from outstanding invoices within hours, significantly shortening payment cycles.
  • Competitive Financing Rates: The bidding system ensures multiple financiers bid on your invoices, leading to competitive interest rates.
  • Collateral-Free: Financing is secured based on the creditworthiness of the  buyer, eliminating the need for the supplier to pledge collateral.
  • Zero Recourse: After the funds are disbursed, the supplier does not hold responsibility for any default by the buyer.
  • Improved Cash Flow: The platform provides seamless access to working capital, enabling business growth.

For Buyers:

  • Extended Credit Period: Buyers can continue to enjoy their current credit terms without affecting their suppliers’ cash flow.
  • Stronger Supplier Relationships: Timely payments to suppliers foster trust and build stronger, long-term partnerships.
  • Operational Efficiency: The platform automates the payment and process, reducing administrative effort.

For Financiers:

  • Investment Opportunity: TReDS provides a new avenue for banks and NBFCs to finance creditworthy corporate supply chains.
  • Reduced Risk: The digital platform offers a high degree of transparency and security, reducing the risk of fraud.

Who Can Participate in TReDS?

TReDS involves three primary participants:

  1. MSMEs and Other Suppliers: Businesses that supply goods and services to buyers. According to an RBI mandate, all companies with an annual turnover of over ₹500 crore must register on a TReDS platform to ensure MSMEs have access to liquidity.
  2. Buyers: Large corporations, public sector undertakings (PSUs), and government departments that purchase goods or services from suppliers.
  3. Financiers: Banks, Non-Banking Financial Companies (NBFCs), and other financial institutions that provide funds by discounting invoices.

Step-by-Step Process of TReDS

The entire TReDS process is designed for speed and simplicity.

  1. Invoice Upload: The supplier or the buyer uploads the invoice and other relevant documents onto the platform. 
  2. Approval: The buyer verifies and accepts the invoice, acknowledging their payment obligation.
  3. Bidding: The accepted invoice is made available to multiple financiers. They review the credit risk and place competitive bids at a discount rate.
  4. Acceptance of Bid: The supplier selects the most favorable bid.
  5. Payment to Supplier: The chosen financier instantly transfers the discounted amount to the supplier’s bank account.
  6. Payment to Financier: On the due date, the buyer pays the full invoice amount to the financier. The transaction is then closed.

Factoring Unit (FU) Explained

 A factoring unit (FU), also known as an invoice or bill of exchange, is the digital representation of a trade receivable. The invoice or a factoring unit contains all the necessary details of the transaction, including the supplier, buyer, invoice number, amount, and due date. It is the core instrument that is auctioned off to financiers.

Who can generate an Invoice?

The invoice can be initiated either by the supplier or the buyer. However, it is the buyer’s acceptance that makes the invoice valid and ready for bidding. This dual-party creation and acceptance mechanism ensures the authenticity of the trade receivable and reduces the risk for financiers.

Documents Needed for Registration

To register on a TReDS platform like KredX DTX, suppliers typically need the following documents:

  • PAN Card
  • GSTIN (Goods and Services Tax Identification Number)
  • Udyam Registration Certificate (for MSMEs)
  • Canceled cheque 

How to Register on the KredX DTX Platform?  

After submitting the relevant documents, the team assists with filling out the application, allowing you to onboard hassle-free, usually within 24 hours.

Why choose KredX DTX as your TReDS partner?

DTX by KredX, an RBI-licensed TReDS platform, connects suppliers, buyers, and financiers, digitising and discounting trade receivables to simplify working capital requirements with an innovative and seamless experience. 

 With DTX by KredX, MSMEs and suppliers can unlock instant access to funds, usually within 24 hours. Suppliers can gain access to a vast network of over 50 financiers, ensuring the most competitive rates.  

 For MSMEs, it means fast, affordable, and debt-free access to working capital. Corporate buyers gain efficiency and supplier trust. Financiers benefit from secure, diversified, and regulated investment opportunities.

Final Thoughts

TReDS platforms like KredX DTX are reshaping the business landscape for suppliers, buyers, and financiers. By providing a structured, secure, and competitive way to access working capital, it helps to solve the long-standing problem of delayed payments. This empowers suppliers to grow and businesses to scale while strengthening the entire ecosystem by promoting efficiency in ‌supply chain management.

Can TReDS replace reverse factoring transactions?

TReDS platforms facilitate reverse factoring transactions through a transparent and secure framework, enabling buyers, suppliers, and financiers to connect on a single platform

In a TReDS transaction, financing is done on a non-recourse basis. This means the financier bears the risk of default, and the supplier is not held responsible if the buyer fails to pay on the due time..

Yes. All TReDS platforms operate under a license issued by the Reserve Bank of India (RBI) and are regulated to ensure transparency, security, and compliance.

Once the buyer accepts the invoice on the platform, the supplier can receive funds, usually within 24 hours, through competitive bidding from multiple financiers.

TReDS is an RBI-regulated, multi-financier platform that uses an auction mechanism to offer       competitive financing rates while eliminating the need for collateral. Traditional invoice discounting, on the other hand, is usually offered by a single bank or NBFC, which results in pledging assets and limited financing options.

While the primary focus and benefit of TReDS is on MSMEs, they are not the only participants on the platform. The system is designed to be a three-way marketplace:

  • Sellers (MSMEs): The entire purpose of TReDS is to help these businesses get paid faster for the goods and services they have sold to larger companies.
  • Buyers: This includes large corporations, PSUs, and government departments. These are the entities that purchase goods or services from suppliers and are responsible for paying the invoices. The system’s success relies on their participation, and the government has made it mandatory for corporates and CPSEs to register on a TReDS platform in India.
  • Financiers: The group includes multiple banks, NBFCs, and other financial institutions. They are the ones who bid on and discount the invoices, providing the immediate cash to the supplier.

Payments are disbursed quickly. Once a buyer approves the invoice on the platform, the MSME supplier can receive the payment on the next working day, often within 24 hours.

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