Credit and Finance for MSMEs: Trade receivables discount platform for MSMEs M1xchange has raised a $10 million round led by Amazon along with participation from BEENEXT and current investor Mayfield. The investment was the debut deal for the $250 million Smbhav Venture Fund launched by Amazon on Thursday at the company’s annual Smbhav occasion. M1xchange was amongst the 3 Trade Receivables Discounting Systems (TReDS) which includes RXIL and Invoicemart that received approval from the Reserve Bank of India (RBI) in 2017 for facilitating the financing of trade receivables. M1xchange connects MSMEs with banks by way of its marketplace exchange exactly where former assign invoice dues to a bank or financier to unlock working capital tied up in unpaid invoices.
Launched a small more than 3 years back, M1xchange has discounted invoices worth $1.7 billion across 10,000 MSME suppliers so far in India at an interest price of 6-10 per cent per annum. The typical turnaround time correct from the presentation of bills to their validation and disbursement of funds is two days, according to the corporation. M1xchange has 36 companion banks on its platform.
“This investment comes at a time when M1xchange is working towards integrating this secured marketplace for receivables financing with other government digital initiatives. With this new funding, we plan to further expand our reach beyond the 352 cities from where MSMEs currently enjoy the benefit of discounted invoices” said Sundeep Mohindru, CEO of M1xchange.
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To ease the working capital crunch for MSMEs in the absence of clearance of dues, the government had also urged massive enterprises final year to onboard the TReDS platform. Central Public Sector Enterprises (CPSEs) and other corporations with turnover of more than Rs 500 crore have been mandated to join the platform as purchasers along with MSMEs as sellers and banks, NBFCs, and other monetary institutions permitted by RBI to participate as financiers. In February final year, the government’s public procurement portal GeM had announced a partnership with RXIL to assistance government departments, public sector units, CPSEs, and so forth. to finance their payments to MSME sellers of goods and services.
The challenge of uncleared invoices or delayed payments continues to haunt MSMEs. According to the delayed payment monitoring portal MSME Samadhaan, the quantity of delayed payment circumstances filed in the MSE Facilitation Councils (MSEFCs) by micro and compact enterprises (MSEs) has practically doubled from 13,091 as of April 27, 2020, to 25,705 as of April 13, 2021. The quantity payable in the quantity of circumstances filed also improved 125 per cent from Rs 4,112 crore to Rs 9,250 crore for the duration of the stated period.