Think Big Options, a Bangladesh-based FinTech, now offers a digital factoring platform to provide finance solutions for smaller enterprises.
TREDX intends to bring together small companies, financial institutions (FIs), corporations, and suppliers to develop TREDXonline, an online marketplace for digital invoicing. TREDX will permit digital factoring, or the sale of authorized invoices from small and medium-sized firms (SMEs) to financial institutions (FIs) at a discount, in real-time.
According to M Masrur Reaz, managing director of Think Big, SMEs account for around a quarter of the country’s GDP. However, many of them have little access to formal funding.
Reaz explained that the goal was to increase access to financing for those who don’t have much collateral but also have working cash locked up in bills payable by larger firms.
“Factoring, as a product, is best equipped to satisfy the demands of SME suppliers,” he says. “Factoring businesses and banks could have reduced their approved invoices and supplied the suppliers with much-needed liquidity.”
The Financial Accounting Standards Board recently mandated corporations operating in the United States to report information about supply chain finance agreements.
Firms will now be required to publish the outstanding sums associated with the programs as well as the details of the financing agreements.
The regulation was introduced in December of last year and will go into force early next year. It will address the issue that more transparent accounting would highlight the consequences of the programs on capital and cash flows.
The initiatives provide a lifeline to suppliers by allowing purchasers to pay vendors with third-party financing earlier than normal.
