Mandatory TReDS Registration for Companies Above Rs. 250 Crore Turnover Before 31st Mar 2025

Mandatory TReDS Registration for Companies Above Rs. 250 Crore Turnover Before 31st Mar 2025. To boost the financial system for Micro, Small, and Medium Enterprises (MSMEs) in India, the Government of India through its Gazette notification S.O.- 4845E dated 7.11.2024 has mandated that all companies registered under the Companies Act, 2013, with a turnover exceeding Rs. 250 crore, as well as all Central Public Sector Enterprises (CPSEs), must onboard the Trade Receivables Discounting System (TReDS) platforms by March 31, 2025. 
What is TreDS?
TReDS is an electronic platform designed to facilitate the financing of trade receivables of MSMEs through multiple financiers. It enables MSMEs to convert their trade receivables into liquid funds, thereby improving their cash flow and ensuring timely payments. The platform addresses the issue of delayed payments to MSMEs, which has been a longstanding challenge hindering their growth and sustainability. 
Why is TReDS important?
The Trade Receivables Discounting System (TReDS) plays an important role in improving the financial health of Micro, Small, and Medium Enterprises (MSMEs) by facilitating faster payments. It accelerates the payment cycle, ensuring that businesses receive timely payments for their goods and services, thereby reducing cash flow constraints. By allowing MSMEs to receive funds upfront, TReDS optimizes cash flow, enabling businesses to invest in growth initiatives, manage working capital efficiently, and meet their operational expenses without financial strain. Additionally, the platform significantly reduces financial risk by mitigating delays in payments, safeguarding MSMEs from potential financial distress caused by cash flow shortages. Another key advantage of TReDS is its enhanced transparency, as it provides a streamlined and fair discounting process with clear visibility into transactions, ensuring equitable pricing and efficiency in receivables management.
Recognizing its importance, the government has introduced a new mandate that requires all companies registered under the Companies Act, 2013, with an annual turnover exceeding Rs. 250 crore, to onboard the TReDS platform. This regulatory expansion is a game changer, as it encourages a more inclusive and efficient financial ecosystem for MSMEs by ensuring that larger companies participate in the structured discounting system. By making TReDS adoption mandatory for large enterprises, the initiative aims to improve liquidity in the MSME sector, strengthen supplier-buyer relationships, and promote a healthier credit culture in India’s business environment.
Implications for Large Corporates and CPSEs
The mandatory onboarding of large corporates and CPSEs onto TReDS platforms has several significant implications:
1. Enhanced Liquidity for MSMEs: By participating in TReDS, large corporates and CPSEs facilitate quicker realization of receivables for MSMEs, thereby improving their liquidity and operational efficiency. 
2. Compliance with Payment Timelines: The platform ensures adherence to statutory payment timelines, reducing instances of delayed payments to MSMEs. 
3. Smooth Financial Processes: Onboarding onto TReDS promotes transparency and efficiency in financial transactions between buyers and MSME suppliers, leading to streamlined processes and reduced administrative burdens. 
Process of Registration on TReDS
To register on a Trade Receivables Discounting System (TReDS) platform, companies must first choose a Reserve Bank of India (RBI)-authorized platform that best aligns with their operational needs. Some of the recognized platforms include Receivables Exchange of India Ltd (RXIL), M1xchange, and Invoicemart. The selection of the platform should be based on factors such as ease of use, service offerings, and compatibility with the company’s financial processes.
Once the appropriate platform is chosen, businesses need to visit the official website of the selected TReDS platform and initiate the registration process by providing basic company details to create an account. After the initial account setup, an email verification process is conducted to ensure authenticity and secure access. Following this, companies are required to submit essential Know Your Customer (KYC) documents, which typically include a Company Registration Certificate, Permanent Account Number (PAN), Goods and Services Tax (GST) registration details, financial statements, and a board resolution or authorization letter granting permission to transact on the platform.
After submitting these documents, the platform undertakes a verification process to confirm the legitimacy and compliance of the applicant business. Upon successful verification, companies are required to sign a participation agreement that outlines the terms and conditions of using the TReDS platform. This agreement serves as a formal acknowledgment of the operational guidelines and responsibilities of the participants.
Finally, businesses may need to pay any applicable registration fees as specified by the platform. Once the registration is complete and all formalities are fulfilled, the company gains access to the TReDS platform, enabling them to facilitate trade receivables discounting and improve their cash flow by selling invoices to financiers at competitive rates.
Time to Act Quickly
With the March 31, 2025, deadline for onboarding to the Trade Receivables Discounting System (TReDS) fast approaching, corporates with an annual turnover exceeding Rs. 250 crore must take proactive steps to comply with this regulatory mandate. Beyond mere compliance, integrating TReDS into financial operations presents a strategic opportunity for businesses. By leveraging the platform, corporates can optimize their cash flow, ensuring smoother financial management and liquidity. Additionally, timely payments facilitated through TReDS strengthen supplier relationships, fostering trust and reliability within the supply chain. Adopting this system also enhances corporate reputation, demonstrating a commitment to fair trade practices and financial transparency.
FAQs
Q1. What is the Trade Receivables Discounting System (TReDS) and how does it benefit MSMEs?
Ans. TReDS is an electronic platform that facilitates the financing of trade receivables of Micro, Small, and Medium Enterprises (MSMEs). It allows MSMEs to convert their trade receivables into liquid funds quickly, improving their cash flow and ensuring timely payments. This helps address the issue of delayed payments, which has historically hindered MSME growth and sustainability.
Q2. Which companies are now mandated to onboard the TReDS platform, and by what deadline?
Ans. All companies registered under the Companies Act, 2013, with a turnover exceeding Rs. 250 crore, as well as all Central Public Sector Enterprises (CPSEs), are mandated to onboard the TReDS platforms. The deadline for compliance is March 31, 2025.
Q3. How has the government's TReDS mandate evolved over time?
Ans. Initially, in 2018, the mandate required companies with a turnover exceeding Rs. 500 crore and all CPSEs to onboard TReDS. The recent notification has expanded this requirement to include companies with turnovers exceeding Rs. 250 crore, demonstrating the government's commitment to further supporting the MSME sector.
Q4. What are the key implications for large corporates and CPSEs that are required to onboard TReDS?
Ans. The mandatory onboarding will lead to:

Enhanced liquidity for MSMEs by facilitating quicker realization of receivables.

Improved compliance with statutory payment timelines, reducing delayed payments.

Streamlined financial processes through increased transparency and efficiency in transactions.

Q5. How do companies onboard the TReDS platform, and which platforms are available?
Ans. Companies must select an RBI-authorized TReDS platform, such as Receivables Exchange of India Ltd (RXIL), M1xchange, or Invoicemart, and complete the registration formalities specified by the chosen platform. The process must be completed by March 31, 2025.

To boost the financial system for Micro, Small, and Medium Enterprises (MSMEs) in India, the Government of India through its Gazette notification S.O.- 4845E dated 7.11.2024 has mandated that all companies registered under the Companies Act, 2013, with a turnover exceeding Rs. 250 crore, as well as all Central Public Sector Enterprises (CPSEs), must onboard the Trade Receivables Discounting System (TReDS) platforms by March 31, 2025.

What is TreDS?

TReDS is an electronic platform designed to facilitate the financing of trade receivables of MSMEs through multiple financiers. It enables MSMEs to convert their trade receivables into liquid funds, thereby improving their cash flow and ensuring timely payments. The platform addresses the issue of delayed payments to MSMEs, which has been a longstanding challenge hindering their growth and sustainability.

Why is TReDS important?

The Trade Receivables Discounting System (TReDS) plays an important role in improving the financial health of Micro, Small, and Medium Enterprises (MSMEs) by facilitating faster payments. It accelerates the payment cycle, ensuring that businesses receive timely payments for their goods and services, thereby reducing cash flow constraints. By allowing MSMEs to receive funds upfront, TReDS optimizes cash flow, enabling businesses to invest in growth initiatives, manage working capital efficiently, and meet their operational expenses without financial strain. Additionally, the platform significantly reduces financial risk by mitigating delays in payments, safeguarding MSMEs from potential financial distress caused by cash flow shortages. Another key advantage of TReDS is its enhanced transparency, as it provides a streamlined and fair discounting process with clear visibility into transactions, ensuring equitable pricing and efficiency in receivables management.

Recognizing its importance, the government has introduced a new mandate that requires all companies registered under the Companies Act, 2013, with an annual turnover exceeding Rs. 250 crore, to onboard the TReDS platform. This regulatory expansion is a game changer, as it encourages a more inclusive and efficient financial ecosystem for MSMEs by ensuring that larger companies participate in the structured discounting system. By making TReDS adoption mandatory for large enterprises, the initiative aims to improve liquidity in the MSME sector, strengthen supplier-buyer relationships, and promote a healthier credit culture in India’s business environment.

Implications for Large Corporates and CPSEs

The mandatory onboarding of large corporates and CPSEs onto TReDS platforms has several significant implications:

1. Enhanced Liquidity for MSMEs: By participating in TReDS, large corporates and CPSEs facilitate quicker realization of receivables for MSMEs, thereby improving their liquidity and operational efficiency.

2. Compliance with Payment Timelines: The platform ensures adherence to statutory payment timelines, reducing instances of delayed payments to MSMEs.

3. Smooth Financial Processes: Onboarding onto TReDS promotes transparency and efficiency in financial transactions between buyers and MSME suppliers, leading to streamlined processes and reduced administrative burdens.

Process of Registration on TReDS

To register on a Trade Receivables Discounting System (TReDS) platform, companies must first choose a Reserve Bank of India (RBI)-authorized platform that best aligns with their operational needs. Some of the recognized platforms include Receivables Exchange of India Ltd (RXIL), M1xchange, and Invoicemart. The selection of the platform should be based on factors such as ease of use, service offerings, and compatibility with the company’s financial processes.

Once the appropriate platform is chosen, businesses need to visit the official website of the selected TReDS platform and initiate the registration process by providing basic company details to create an account. After the initial account setup, an email verification process is conducted to ensure authenticity and secure access. Following this, companies are required to submit essential Know Your Customer (KYC) documents, which typically include a Company Registration Certificate, Permanent Account Number (PAN), Goods and Services Tax (GST) registration details, financial statements, and a board resolution or authorization letter granting permission to transact on the platform.

After submitting these documents, the platform undertakes a verification process to confirm the legitimacy and compliance of the applicant business. Upon successful verification, companies are required to sign a participation agreement that outlines the terms and conditions of using the TReDS platform. This agreement serves as a formal acknowledgment of the operational guidelines and responsibilities of the participants.

Finally, businesses may need to pay any applicable registration fees as specified by the platform. Once the registration is complete and all formalities are fulfilled, the company gains access to the TReDS platform, enabling them to facilitate trade receivables discounting and improve their cash flow by selling invoices to financiers at competitive rates.

Time to Act Quickly

With the March 31, 2025, deadline for onboarding to the Trade Receivables Discounting System (TReDS) fast approaching, corporates with an annual turnover exceeding Rs. 250 crore must take proactive steps to comply with this regulatory mandate. Beyond mere compliance, integrating TReDS into financial operations presents a strategic opportunity for businesses. By leveraging the platform, corporates can optimize their cash flow, ensuring smoother financial management and liquidity. Additionally, timely payments facilitated through TReDS strengthen supplier relationships, fostering trust and reliability within the supply chain. Adopting this system also enhances corporate reputation, demonstrating a commitment to fair trade practices and financial transparency.

FAQs

Q1. What is the Trade Receivables Discounting System (TReDS) and how does it benefit MSMEs?

Ans. TReDS is an electronic platform that facilitates the financing of trade receivables of Micro, Small, and Medium Enterprises (MSMEs). It allows MSMEs to convert their trade receivables into liquid funds quickly, improving their cash flow and ensuring timely payments. This helps address the issue of delayed payments, which has historically hindered MSME growth and sustainability.

Q2. Which companies are now mandated to onboard the TReDS platform, and by what deadline?

Ans. All companies registered under the Companies Act, 2013, with a turnover exceeding Rs. 250 crore, as well as all Central Public Sector Enterprises (CPSEs), are mandated to onboard the TReDS platforms. The deadline for compliance is March 31, 2025.

Q3. How has the government's TReDS mandate evolved over time?

Ans. Initially, in 2018, the mandate required companies with a turnover exceeding Rs. 500 crore and all CPSEs to onboard TReDS. The recent notification has expanded this requirement to include companies with turnovers exceeding Rs. 250 crore, demonstrating the government's commitment to further supporting the MSME sector.

Q4. What are the key implications for large corporates and CPSEs that are required to onboard TReDS?

Ans. The mandatory onboarding will lead to:

Enhanced liquidity for MSMEs by facilitating quicker realization of receivables.
Improved compliance with statutory payment timelines, reducing delayed payments.
Streamlined financial processes through increased transparency and efficiency in transactions.

Q5. How do companies onboard the TReDS platform, and which platforms are available?

Ans. Companies must select an RBI-authorized TReDS platform, such as Receivables Exchange of India Ltd (RXIL), M1xchange, or Invoicemart, and complete the registration formalities specified by the chosen platform. The process must be completed by March 31, 2025.