<p>
    For businesses especially MSMEs access to timely working capital can mean the difference between growth and stagnation. Two common financing options that help unlock cash stuck in receivables are TReDS (Trade Receivables Discounting
    System) and traditional factoring. While both help improve liquidity by converting invoices into cash, they differ significantly in structure, accessibility, and flexibility.
</p>
<p>At SBI Factors Limited, we offer both options and help businesses choose what best fits their needs. Here's a clear comparison to help you make the right choice.</p>
<p><br></p>

<h2>What Is Traditional Factoring?</h2>

<p>
    Traditional factoring is a financing method where a business sells its invoices (accounts receivable) to a factoring company like SBI Factors. In return, the business gets immediate funds—typically 80–90% of the invoice value with the
    balance paid after the buyer settles the full invoice.
</p>

<div style="display: flex; align-items: center;">
    <h2 style="width: fit-content;">Key features</h2><span style="margin: 5px;">:</span>
</div>

<ul>
    <li>
        Direct agreement between seller and SBI Factors.
    </li>
    <li>
        Customized credit limits and terms.
    </li>
    <li>
        Confidential or disclosed options available.
    </li>
    <li>
        Greater flexibility in client selection and invoice submission.
    </li>
</ul>

<h2>What Is TReDS?</h2>
<p><span style="font-family: -apple-system, BlinkMacSystemFont, &quot;segoe ui&quot;, Roboto, &quot;helvetica neue&quot;, Arial, &quot;noto sans&quot;, sans-serif, &quot;apple color emoji&quot;, &quot;segoe ui emoji&quot;, &quot;segoe ui symbol&quot;, &quot;noto color emoji&quot;; font-size: 0.88rem;">TReDS is a digital platform regulated by the Reserve Bank of India (RBI) that facilitates the discounting of trade receivables specifically for MSMEs. It involves a three-party model: the MSME seller, a large corporate buyer, and a
    financier. Once the buyer accepts the invoice on the platform, it's available for bidding by multiple financiers.</span><br>
</p><div style="display: flex; align-items: center;">
    <h2 style="width: fit-content;">Key features</h2><span style="margin: 5px;">:</span>
</div>

<ul>
    <li>Open bidding brings competitive discounting rates.</li>
    <li>Entire process is online and standardized.</li>
    <li>Only MSME sellers are eligible; large buyers must be registered.</li>
    <li>Limited control over pricing and counterparty selection.</li>
</ul>
<p>TReDS vs. Traditional Factoring: Key Differences</p>

<table style="width: 100%;">
    <tbody>
        <tr style="text-align: left;">
            <td style="text-align: left;"><strong>Feature</strong></td>
            <td style="text-align: left;"><strong>TReDS</strong></td>
            <td style="text-align: left;"><strong>Traditional Factoring</strong></td>
        </tr>
        <tr>
            <td>Eligibility</td>
            <td>Only MSMEs (as sellers)</td>
            <td>Open to all businesses</td>
        </tr>
        <tr>
            <td>Platform</td>
            <td>Online, RBI-regulated marketplace</td>
            <td>Direct relationship with factor (like SBI Factors)</td>
        </tr>
        <tr>
            <td>Invoice Acceptance</td>
            <td>Mandatory buyer acceptance on platform</td>
            <td>Not always needed</td>
        </tr>
        <tr>
            <td>Pricing Control</td>
            <td>Bidding by financiers; seller has limited control</td>
            <td>Negotiated directly</td>
        </tr>
        <tr>
            <td>Speed of Funds</td>
            <td>Typically fast after buyer acceptance</td>
            <td>Immediate post submission (based on terms)</td>
        </tr>
        <tr>
            <td>Flexibility</td>
            <td>Standardized format</td>
            <td>Customizable terms and services</td>
        </tr>
    </tbody>
</table>

<p>Which One Should You Choose?</p>
<div style="display: flex; align-items: center;">
    <h2 style="width: fit-content;">Choose TReDS if</h2><span style="margin: 5px;">:</span>
</div>
<ul>
    <li>You're a registered MSME with large corporate buyers.</li>
    <li>You want market-based discounting rates.</li>
    <li>You prefer digital processes with high transparency.</li>
</ul>
<div style="display: flex; align-items: center;">
    <h2 style="width: fit-content;">Choose Traditional Factoring if</h2><span style="margin: 5px;">:</span>
</div>
<ul>
    <li>You want more flexibility in terms, credit limits, and buyers.</li>
    <li>You're not an MSME, or your buyers are not TReDS-registered</li>
    <li>You prefer a one-on-one relationship and tailored financing.</li>
</ul>

<p>
    <br>
    <span style="font-size: 24px;">
        <strong><span style="font-size: 18px;">How SBI Factors Limited Can Help</span></strong>
    </span>
    At SBI Factors, we understand that one size doesn't fit all. Whether you're exploring the structured approach of TReDS or need the flexibility and depth of traditional factoring, we help you navigate both options. Our offerings include:
    Customized solutions Quick turnaround Trusted by leading corporates and MSMEs Backed by the strength of the SBI Group <br>
    <br>
    Need help deciding? Get in touch with SBI Factors Limited. Our experts will guide you to the best fit based on your industry, clients, and cash flow needs.
</p>

Understand the difference between TReDS and traditional factoring. Find out which financing option suits your business best with insights from SBI Factors Limited.

TReDS vs. Traditional Factoring: Which One is Right for Your Business?