Hindustan Aeronautics Ltd (HAL), the strategic state-owned aerospace and defense PSU, executed its first digitized invoice discounting transaction on RXIL TReDS platform when it accepted the digital invoice uploaded by Narendra Udyog, a Nasik based MSME (micro category) vendor. This makes HAL the first PSU to transact on TReDS across platforms. The transaction was financed by Bank of Baroda and since stands settled.
TReDS is an online electronic institutional mechanism for facilitating the financing of trade receivables of MSMEs through multiple financiers. The TReDS Platform will enable discounting of invoices/bills of exchange of MSME Sellers against large Corporates including Govt. Departments and PSUs, through an auction mechanism, to ensure the prompt realization of trade receivables at competitive market rates.
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.
A seller has to upload the invoice on the platform. It then goes to the buyer for acceptance. Once the buyer accepts, the invoice becomes a factoring unit. The factoring unit then goes to auction. The financiers then enter their discounting (finance) rate. The seller or buyer, whoever is bearing the interest (financing) cost, gets to accept the final bid. TReDs then settle the trade by debiting the financier and paying the seller. The amount gets credited the next working day into the seller’s designated bank account through an electronic payment mode. The second leg of the settlement is when the financier makes the repayment and the amount is repaid to the financier.