In case of Factoring, the Seller initiates the process of financing of trade receivables and generally bears in the interest or financing cost.
In case of Reverse Factoring, the Buyer initiates the process of financing of trade receivables of Sellers. The Buyer may or may not bear the interest or financing cost as may be agreed between the Buyer and Seller.
Currently, the new user id is valid for a period of 30 days.
Participants must have engaged in business for at least 1 year (Except Financiers).
Yes. The status can be tracked by visiting the status tracker page of the online registration module. Further Email Alerts / Notifications are also sent at various stages of registration.
All the participants intending to register on the TReDS platform will need to pay one-time non-refundable Registration Fee at the time of registration. In addition to the Registration Fee, the participants will have to pay an Annual Fee with service tax by 30th day of April every year. RXIL reserves right to withhold transaction rights of entities which have not remitted fees.
Instrument is nothing but invoice details and scanned invoice uploaded either by the Seller or Buyer reflecting the underlying trade receivables of MSME Sellers. Only the Tax Invoice is accepted as a valid invoice.
Only tax invoice is mandatory. Other supporting documents like Good Receipt Note, Lorry Receipt / Freight Delivery Document or Credit/Debit Note are optional.
As per RBI TReDS guidelines, it is mandatory for the counterparty to provide acceptance of the invoice on the TReDS platform. In case the Seller uploads the invoice it needs to be accepted by the Buyer; while in case of Buyer uploading the invoice, the Seller must accept the invoice for factoring or financing on the TReDS platform.
Yes. TReDS platform provides for maker checker functionality for Buyers and Sellers for creation of instruments. The maker creating the instrument cannot be a checker and vice versa.
Buyer Seller link allows the relationship to be established between the Buyer and the Seller on TReDS platform. This relationship drives the entire processing of transactions on the TReDS platform including counterparty approval.
TReDS platform provides the flexibility for either the Seller or the Buyer to bear the interest cost. The interest obligation for financing of factoring units is accordingly calculated by the TReDS platform.
On acceptance of the instrument (comprising of invoice details and scanned invoice) by the counterparty, the instrument becomes a Factoring Unit. Only accepted instruments enter into an auction.
Only Tax invoice for Manufacturing and Service activity with minimum balance tenor of 15 days, which have not been financed from any other source and not encumbered, can be uploaded on the TReDS platform.
Banks, NBFC Factors and other entities permitted by RBI and registered on TReDS portal of RXIL as Financiers can participate in the auction. Each financier needs to define a credit limit on the Buyer associated with the factoring unit to enter a bid in the auction.
Seller or Buyer whoever is having right to accept the bid, can see the bids offered by the Financiers.
The Auction Market where the Financiers can enter bids shall be open from 9:00 AM to 9:00 PM every day.
The participant having the right to accept the bid can accept the bids any time during the day. The cut-off time for acceptance of bid is 4:00 PM for T+1 (Bid acceptance date + 1 working day) Settlement. Any bid accepted after the cut-off time shall be settled on T+2 (Bid acceptance date + 2 working days) basis.
The factoring of the factoring unit shall depend on time consumed in receipt of bid from the Financiers during auction period and it’s acceptance by the seller/buyer. On bid acceptance, the system shall ensure that the factoring unit of Micro & Small Enterprises to be factored within 45 days from the Goods Acceptance Date. The payment shall be settled on T+1 or T+2 basis based on the cut-off time of acceptance of bid. The turnaround time for financing of factoring unit of MSME’s shall depend on offering of bids by the financiers, acceptance of bids by the cost bearer and settlement of obligation by the financier.
If no bids are received from Financiers or the invoice remains unfinanced then the obligation between the Buyer and Seller continues and the Buyers now needs to make the payment to the Seller. The Buyer has the option to make the payment to the Seller through the system.
No. The financing of factoring units is not guaranteed on the TReDS platform. The same shall depend on offering of bids by the Financiers, acceptance of bids by the cost bearer and settlement of obligation by the participants (Financiers for Leg 1 and Buyers for Leg 2).
Yes. A Factoring Unit may be withdrawn from TReDS portal till the time a bid is not accepted by the cost bearer. Once the bid is accepted by the cost bearer, the Factoring Unit cannot be withdrawn.
There is a provision on the TReDS Platform to define who is going bear the interest cost. In case of Leg 3 where the invoice remains unfinanced then in that case the Buyer has the option to make the payment directly to the Seller through the TReDS platform. In such cases the transaction charge will be borne by the Buyer.
No security is required to be given by Seller or Buyer to RXIL for the purpose of factoring of trade receivables on the TReDS Platform. However, any financing transaction on the TReDS portal of RXIL will tantamount to an assignment of receivables in favour of the Financier. The same is also required to be registered with Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI).
The Buyer shall repay the obligation to the financier on the due date of the factored invoice which shall be goods acceptance date plus credit period. If the due date falls on a holiday, the obligations need to be settled on the preceding working day.
The Buyer shall provide debit mandate to RXIL at the time of registration.The designated bank account of the Buyer on TReDS platform will be auto-debited for the purpose of crediting the obligations to the designated bank account of the Financier.
Non-payment by the Buyer on the due date to the Financier is tantamount to a default by the Buyer. The transaction is marked as Failed in the TReDS platform. The Buyer is required to settle directly with the Financier.