The Trade Receivables Discounting System (TReDS) process flow involves several steps that are carried out on the TReDS platform. Here is a detailed explanation of the process flow under TReDS:
Step 1: Registration: The SME seller and the corporate buyer need to register on the TReDS platform. During the registration process, they need to provide their KYC details and other relevant information. The registration process is completed once the platform verifies and approves their details.
Step 2: Uploading of Invoices: After registration, the SME seller can upload their invoices on the TReDS platform. The invoices are then sent for validation to the corporate buyer.
Step 3: Validation of Invoices: The corporate buyer verifies the details mentioned in the invoice, such as the quantity, price, and delivery of goods or services. If the details are correct, the corporate buyer approves the invoice on the TReDS platform.
Step 4: Discounting of Invoices: Once the invoice is approved by the corporate buyer, the SME seller can initiate the process of invoice discounting. The SME seller can view offers made by various financiers and select the best offer. The financier then disburses the funds to the SME seller’s bank account.
Step 5: Payment Collection: The financier collects the payment from the corporate buyer on the due date of the invoice. The corporate buyer makes the payment directly to the financier.
Step 6: Settlement of Accounts: The TReDS platform settles the accounts between the SME seller, corporate buyer, and the financier. The platform charges a small fee for its services.
Step 7: Reporting and Analysis: The TReDS platform provides reports and analytics to the SME seller, corporate buyer, and the financier. The reports help them to track their invoices and monitor their cash flows.
The TReDS platform provides several benefits to SMEs, such as access to finance, speed, transparency, reduced risk, efficiency, and cash flow management. The platform also helps corporate buyers to ensure timely payments to their suppliers and financiers to earn a return on their investments in trade receivables. The process flow under TReDS is designed to simplify invoice discounting and improve the efficiency of the trade finance ecosystem.