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How it Works?

  • Factoring
  • Reverse Factoring

Factoring

Factoring & Reverse Factoring are two methods of bill discounting on a TReDS platform. Both of these methods are designed to speed up the vendor payment process without disturbing the balance sheet of any stakeholder.

In Factoring, the Supplier raises the invoice and the Buyer verifies the same. This enables the financiers which are also the invoice factoring company to bid against the verified and approved invoice. Once the supplier accepts the bid, the payment is processed in T+2 days. TReDS gives this flexibility to the Suppliers to choose the best factoring companies on diverse parameters such as transparency, customer confidentiality, factoring rates & fees.

Supplier supplies
the goods or services

Supplier logs in and
uploads the invoice for
Receivables

Buyer verifies and
approves the invoice

The invoice is converted into
Factoring Units
for bidding

Financiers bid
against the Factoring Units

Supplier accepts the most
Favourable bid

M1 Generates
settlement instructions
for debiting the
financier and crediting
the Supplier

M1 Generates
settlement instructions for
debiting the buyer and
crediting the financier

Reverse Factoring

Factoring & Reverse Factoring and two methods a bill is discounted on TReDS platform. Both the methods are designed to speed up and increase cash flow without disturbing the balance sheet.

In Reverse Factoring, flow of fund is same as Factoring, i.e. from Buyer to Supplier. But, in this process, the Buyer floats an invoice and the Supplier verifies and approves the same to initiate the bidding process. Once the supplier accepts the bid, the payment is processed in T+2 days.

Supplier supplies
the goods or services

Buyer logs in and
uploads the invoice for
Receivables

Supplier verifies and
approves the invoice

The invoice is converted into
Factoring Units
for bidding

Financiers bid
against the Factoring Units

Supplier accepts the most
Favourable bid

M1 Generates
settlement
instructions for debiting the
financier and crediting
the Supplier

M1 Generates
settlement instructions for
debiting the buyer and
crediting the financier

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