TReDS: The Government System That Gets MSMEs Paid in 2 Days Instead of 90

You've done the work. You've delivered the goods to a large corporate or a government department. Now you wait — 60 days, 90 days, sometimes longer — while your own suppliers, staff, and rent don't wait. This is the cash flow trap that kills profitable small businesses.

TReDS was built to break that trap. Budget 2026-27 just made it mandatory for every Central PSU. If you supply to government buyers, the rules of payment just changed in your favour.

What TReDS Actually Is

TReDS stands for Trade Receivables Discounting System. It's an RBI-regulated electronic marketplace where your unpaid invoice becomes a financial asset you can sell today, instead of a promise you wait on for months.

Here's how the transaction works in plain terms. You raise an invoice on a large buyer — say, BHEL or Coal India. Instead of waiting for them to pay you in 90 days, you upload that invoice to a TReDS platform. Banks and NBFCs on the platform bid to finance it. You receive the invoice amount (minus a small discount rate, typically 7–11% annualised) within 24–48 hours. The buyer repays the bank on the original due date.

The key difference from a regular bank loan: you need no collateral. The creditworthiness backing the transaction is your buyer's — a large corporate or PSU — not yours. A ₹2L/month supplier who couldn't get a ₹50L overdraft from any bank can still discount a ₹50L invoice on TReDS if the buyer is creditworthy.

The Three RBI-Approved Platforms

Three platforms are licensed by the RBI to operate TReDS:

Platform	Operated By	Best Known For
M1xchange	Mynd Solutions	Largest network of financiers, GeM integration m1xchange
RXIL	NSE + SIDBI JV	Strong PSU and large corporate buyer base rxil
DTX (KredX)	KredX	Faster onboarding, fintech-oriented interface dtxindia

You can register on more than one. Many active MSME sellers do — different buyers may already be on-boarded to specific platforms, and you want your invoice on the platform where your buyer already operates.

What Budget 2026-27 Changed About TReDS

Before February 1, 2026, TReDS was a useful but optional tool — large buyers could register and participate, but there was no compulsion.

The Budget 2026-27 made TReDS mandatory for all MSME transactions with Central Public Sector Enterprises. Every CPSE — ONGC, BHEL, Railways vendors, defence PSUs, state electricity boards — must now process supplier payments through TReDS. Combined with the GeM-TReDS integration, this means government marketplace buyers must also run supplier payments through the platform.

What this unlocks for MSME suppliers is structural. When your buyer is mandated to be on the platform, you don't need to convince anyone. The infrastructure is there. You register, upload the invoice, and a financier bids on it. Karan runs a precision parts manufacturing unit in Pune supplying BHEL and one private auto-parts firm. He's been using TReDS with his BHEL invoices for eight months. Average time to funds: 38 hours. His private buyer still pays in 75 days. Same business, two completely different cash flow realities.

Who Can Register as a Seller

To use TReDS as an MSME seller, you need: bankofmaharashtra.bank

• A valid Udyam Registration Certificate (MSME certificate)
• GST registration
• Active current account with a bank
• PAN card
• Certificate of Incorporation (for companies) or partnership deed / proprietorship declaration
• KYC documents

Sole proprietors, partnerships, LLPs, and private limited companies all qualify as long as they hold a valid Udyam certificate. If yours is expired or you haven't registered under Udyam, start at the Udyam registration page before anything else — it's the eligibility gate for TReDS.

The Step-by-Step Registration Process

Step 1 — Choose your platform. Pick based on where your buyer is already registered. Call their accounts payable team and ask which TReDS platform they use — M1xchange, RXIL, or DTX.

Step 2 — Register online. Go to the platform's website, fill in the registration form, and upload your KYC documents. The process is fully digital; no branch visit required. Approval typically takes 2–5 working days.

Step 3 — Sign agreements with financiers. After registration, you'll be prompted to sign digital agreements with the banks and NBFCs on the platform. Each agreement is a one-time process. More agreements = more financiers bidding = better rates on your invoices.

Step 4 — Start discounting. Upload your accepted invoice (buyer must have already acknowledged receipt of goods/services on the platform), set the minimum rate you'll accept, and wait for bids. The whole process from upload to funds in account: typically 24–48 hours.

The Costs and the Catch

TReDS isn't free working capital — you're selling a future payment at a discount. The cost (discount rate) is typically between 7% and 11% annualised, depending on your buyer's credit rating and market conditions.

On a ₹5 lakh invoice due in 90 days at 9% annualised:

• Discount cost = ₹5,00,000 × 9% × (90/365) = approximately ₹11,096
• You receive ₹4,88,904 today instead of ₹5,00,000 in 90 days

That ₹11,096 buys you 90 days of working capital to take on new orders, pay suppliers on time, and avoid the informal financing market where rates are 24–36% annualised. For most growing businesses, this is not a cost — it's a velocity multiplier.

The catch: TReDS only works for trade receivables. It doesn't finance advance purchases, inventory, or capex. For those needs, a business loan is the right instrument — compare your options on the business loan calculator.

TReDS vs. a Regular Working Capital Loan

	TReDS	Working Capital Loan
Collateral required	None (buyer's credit backs it)	Usually yes
Processing time	24–48 hours	7–30 days
Rate	7–11% annualised	12–18% annualised
Eligibility	Depends on buyer's rating	Depends on your financials
Use case	Specific invoice	General cash needs

If you have a strong buyer — a large corporate, PSU, or government body — TReDS will almost always be cheaper and faster than a working capital loan. If your buyers are small, informal, or unregistered, TReDS won't help you there. Your buyer needs to be on the platform for the transaction to work.

The government finally has teeth behind the 45-day payment rule for MSMEs. Mandatory TReDS for CPSEs is the enforcement mechanism, even if it isn't labelled that way. Register now, before the queue builds — platforms are already seeing a surge in new MSME sign-ups following the budget announcement. Check whether your GST filings are current first at the GST return filing page, since that's part of the KYC verification.