All micro, small and medium enterprise that have successfully secured registration via udyam registration and udyog aadhar registration are required to register under the trade receivables discounting system as stated in the title.
What is trade receivables discounting system exactly? is not that the first question that comes to everyone mind?
Micro, small and medium enterprise with receivable from corporate purchasers and government departments and public sector organizations and other customers are eligible to receive finance in place of the amount due from these buyers under this scheme. Simply put this strategy makes it easier for micro, small and medium enterprise to get funding based on their debtors. Many invoices are pending payment due to uncertain market conditions and as a result of this delay many micro, small and medium enterprise miss out on opportunities that may be right in front of their eyes due to their inability to fund their needs. The government wants to address the tension that micro, small and medium enterprise are experiencing and assist them in growing steadily and sustainably.
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Another way to look at such a system is that it provides micro, small and medium enterprise with collateral free finance based on their business history. Trade receivables discounting system has a number of advantages which we shall go over in more detail below.
Easy access to funds.
Micro, small and medium enterprise who ordinarily face numerous obstacles in receiving a capital infusion now have easy access to such money thanks to this mechanism. To obtain a loan there is no need to go through the time consuming procedure of a bank audit. If your business and efforts are real the government wants to acknowledge them and assist you in obtaining funding to help you take on more enterprise. Under this new framework all sincere efforts toward business growth would not go unnoticed and in vain.
System that does not use paper.
By using an online approach, the new system intends to make the entire process paperless and seamless. All records including micro, small and medium enterprise information and application information must be kept online utilizing platforms that are linked to the ministry of micro, small and medium enterprise system and have been approved by the reserve bank of india.
Everyone has access to the same platform.
Whether you are a buyer and seller as well as funder you will all meet on the same platform. The trade receivables discounting system is a one stop shop for everyone including buyers and sellers as well as financiers. Anyone can take advantage of the system and receive their fair share of rewards.
Transactions on the internet.
The funds are approved and disbursed as well as repayment choices are all accessible over the internet. The micro, small and medium enterprise owner does not need to go to a bank and a government office. This is done in order to eliminate corruption by limiting face to face interaction.
Competitively priced discounts.
The lenders seek to entice you to obtain their financing because the platform gives everyone equal exposure. Because of the transparent structure that tax receivables discounting system is bankers are more willing to give you a better deal than you would get if you approached them directly. It is a competitive market so lenders will do everything they can to meet your needs.
Data integration that is seamless.
The information regarding micro, small and medium enterprise their purchasers and financiers is effortlessly synced with each other thanks to the entirely online system. Any change in one system is automatically updated in the micro, small and medium enterprise framework other system. This enable accurate information and the finest solutions to be obtained.
The tax receivables discounting system procedure are established in accordance with the ministry of micro, small and medium enterprise policy. A standardized strategy has been developed to ensure that data and systems across parallel platforms are in sync with one another and that service quality is not compromised. This allows micro, small and medium enterprise to employ the same process across many platforms.
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Tax receivables discounting system is a win win situation for micro, small and medium enterprise purchasers and funders.
The new programme will not cover activities classified as national interchange code 92 such as gambling and betting.
Buyers and corporation save money by obtaining better bids and choices for obtaining more favourable financing terms from their vendors.
Financers receive ready to use information about small medium enterprise and their financial strength allowing them to establish a robust asset portfolio by funding good small medium enterprise at competitive rates.