Govt mandates TReDS for settlement of all MSME invoices by CPSEs; reduces payment delays

New Delhi, July 10 (IANS) The Central government has made it mandatory for all operating Central Public Sector Enterprises (CPSEs) to route settlement of invoices for goods and services procured from Micro, Small and Medium Enterprises (MSMEs) through TReDS platforms authorised by the Reserve Bank of India, an official statement said on Friday.

The notification requires CPSEs to disclose details of MSME invoices routed and settled through TReDS as specified by the RBI and to obtain a statutory auditor’s certificate of TReDS registration and compliance during their annual audit.

The move is intended to position Central Public Sector Enterprises (CPSEs) as role models for timely payment discipline for large corporate buyers across the country.

The move will also help end long payment delays faced by MSMEs and provide them working capital within a short span of time at competitive rates of interest.

With every CPSE invoice flowing through TReDS, MSME suppliers can convert approved invoices into cash well before the due date. Further, financing on TReDS is collateral-free and without recourse to the seller, with banks and NBFCs bidding competitively to discount invoices.

"By making TReDS the settlement route for all CPSE purchases from MSME, public sector procurement will now work actively for the small supplier: procurement by CPSEs gets captured on TReDS, and timely payment to MSME will be ensured through invoice financing from banks and financial institutions," the statement noted.