Ludhiana: The Union Budget proposals to strengthen the trade receivables discounting system (TReDS) have raised hopes among industry leaders that long-pending payment delays faced by micro, small and medium enterprises (MSMEs) may finally be addressed. With a focus on faster invoice settlement, cheaper financing and wider participation of govt buyers, the measures are expected to significantly improve cash flows for small businesses.TReDS is an online invoice discounting platform that allows MSMEs to receive payment against their bills much before the actual due date. Typically, MSMEs supplying goods or services to large corporations or government entities are paid after 60 to 90 days, and in many cases even later. Under TReDS, once the buyer accepts the invoice on the platform, banks and financial institutions pay the MSME upfront after deducting a small discount, and recover the amount from the buyer on the due date.
Amit Jain, chairman, CII Punjab, said the proposals directly address one of the biggest challenges faced by the SMEs. “The main issue is that SME payments are usually due after 60-90 days. If these invoices can be treated as assets, discounted and converted into cash early, the cash flow problem is largely solved. Even if an SME pays 1-2% to the financier, it is still beneficial because operations continue smoothly and working capital pressure reduces,” Jain said.Industry leaders believe that mandating Central Public Sector Enterprises (CPSEs) participation on TReDS will boost confidence among financiers, as government-owned enterprises are considered low-risk buyers. The proposed credit guarantee mechanism is also expected to encourage more banks and investors to participate, leading to lower discounting costs for MSMEs.Highlighting ground-level challenges, Manjinder Singh Sachdeva, general secretary, Federation of Industrial & Commercial Organisations (FICO), said delayed payments from govt tenders remained a serious concern, particularly for the bicycle industry in Punjab. “Payments from govt projects often stay stuck for months. In some cases, we have to wait 6-9 months to receive our dues. During this time, industries still have to pay wages, and other expenses,” he said.Sachdeva added that an effective TReDS system and linked it with GeM could provide much-needed relief. “If such a mechanism allows industries to receive payments earlier, it would be good for the sector. However, many government schemes fail because of endless conditions, documentation and procedural hurdles. The scheme is good per se, but if the government can deliver what it promises under TReDS without too many ifs and buts, it will truly benefit MSMEs,” he said.
