Receivables Exchange of India Limited (RXIL) was launched under the milestone RBI Trade Receivables Discounting System ("TReDS") to enable the formalization of MSMEs by providing access to credit & is promoted by SIDBI, NSE, SBI, ICICI Group, YES BANK. RxIL empowers small business to realize their growth potential by accelerating liquidation of their receivables. With its innovative digital platform, RXIL facilitates corporate buyers with a single seamless interface to provide their MSME suppliers access to capital at competitive rates, in less than 48 hours.

RXIL Vision:

• To be an integrated provider of financing platform for supporting the growth & development of MSMEs for their sustainable & economic development.
• Enhance the reach of supply chain finance to MSMEs across country & ensure timely payments to MSMEs.
• Enhance transparency in system & to build eco-system for supply chain transactions.
• Simplify supply chain transactions through digital system for expansion of financing for MSMEs.
• To serve more than 1,00,000 MSMEs across India by FY2022.

What is TReDS Platform

Trade Receivables Discounting System (TReDS) is an electronic platform for facilitating/ discounting of trade receivables for MSMEs through multiple financiers  These receivables can be due from corporates and other buyers, including Government Departments and Public Sector Undertakings (PSUs). The participants on a TReDS platform are sellers (only MSMEs), buyers (Only corporate, Government Departments, PSUs and any other entity can participate) and financiers (Only banks, NBFC - Factors and other financial institutions as permitted by the Reserve Bank of India).

The TReDS Platform works in the following way:

Creation of a Factoring Unit (FU), which is a standard nomenclature used in TReDS for invoices or bills of exchange; containing details of invoices/bills of exchange (evidencing sale of goods/services by the MSME sellers to the buyers) on TReDS platform by the MSME seller (in case of factoring) or the buyer (in case of reverse factoring).

Factoring Process Flow (Interest borne by seller): In factoring, the seller uploads the invoices onto the TReDS platform and creates a factoring unit. The buyer approves the factoring unit and the necessary details of the invoice are sent to the financiers for bidding. The seller selects the most suitable bid within 48 hours of acceptance, the financier pays the seller. On the due date, the buyer pays the outstanding amount to the financier Factoring could be used by a seller to discount invoices of  multiple buyers. Following is the flow of this process:

1. Seller: Uploads Invoice
2. Buyer: Accepts Invoice
3. Financiers: Bids for invoice
4. Seller: Accepts bid
5. Financiers: Disburses funds to seller
6. Seller: Receives funds within 48 hours of invoice acceptance
7. Buyer: Pays financier on due date
8. Financiers: Receives outstanding amount

Reverse Factoring (Interest borne by buyer): In a reverse factoring transaction, the buyer upload the Factoring Unit (FU) on the platform and the FU created is shared with the financiers. The financiers bid for the units & the buyer chooses the most suitable bid. On acceptance of the bid, the financier pays the seller within 48 hours. The buyer settles the payment with the financier on a mutually agreed due date. Following is the process:

1. Buyer: Upload invoice
2. Financiers: Bids for invoice
3. Buyer: Accepts bid
4. Financiers: Disburses funds to seller
5. Seller: Receives funds within 48 hours
6. Buyer: Pays financier on due date
7. Financier: Receives total amount

How TReDS can address delayed payment issues of MSMEs

• All the MSME payments by PSUs/State enterprises to be mandatorily routed through TReDS platform to track performance of the payments of these entities.
• Define timelines for PSUs/State enterprise and corporation (over Rs. 500 cr turnover) to be registered on TReDS platform in a time-bound manner & start transacting mandatorily.
• Encouraging banks to finance on TReDS/Overcoming their reluctance in these days to finance on TReDS.
• Proposed MSME classification based on turnover to be introduced at earliest to increase the MSME base.
• Direct linkage with GST Network o upload/validate real time GSTN invoices data. Credit Gurantee Fund / Insurance scheme to be introduced to cover the risk on receivables financed through TReDS platform.
• MSME Industry Associations need to be sensitized to create awareness about TReDS & promote TReDS platform across MSMEs as well as to ensure registration of MSMEs on the platform. Registration campaign/drive can be planned by MSME Associations to stress upon benefits of better liquidity & competitive rates.

Benefits for MSME Sellers

• Quicker Payments: Sellers receive funds against approved invoices within 48 hours without any administrative costs.
• Multiple Financiers: MSMEs are not restricted to a single bank and have the option to choose the lowest bids among the multiple financiers.
• Without Recourse Borrowing: No obligation on the seller to repay the financier and the buyer's account is debited automatically through a pre-approved NACH mandate.
• Lower Cost of Funds: Transparent bidding process to discover the most suitable price and the sellers can access financing at competitive terms as it is based on the credit rating of the buyer.

Benefits for Financiers

• Priority Sector Leading Benefits: Funds disbursed through RXIL are PSL accredited.
• Low Risk of Default: As the credit calls is on the repayment ability of top-rated buyers, the chances of default are minimized.
• Access to Quality Customers: Financiers can access a buyer's ecosystem at a minimal cost.
• Automated Reconciliation: Entire digital platform allows for seamless settlement & reconciliation.

Benefits for the Buyers

• No More Follow-ups: Free your finance team's bandwidth by facilitating quicker payments to your suppliers through TReDS.
• Seamless ERP Integration: RXIL platform seamlessly integrates with ERP systems enabling swift, secure and transparent information exchange between corporates, suppliers and financiers.
• Enhanced Procurement Terms: Gain improved procurement terms by lowering the cost of capital for your suppliers with competitive price discovery through auction across multiple financiers.
• Strengthen Supplier Relationships: Entire digital platform allows for seamless settlement & reconciliation. Streamline vendor payments & empower treasurers to plan  surplus cash effectively.

Registration can be done online on the given link:  https://onboarding.rxil.in/customerapp/home