Bangladesh-based FinTech Think Big Solutions now offers a digital factoring platform to provide financing solutions for smaller businesses, a news report said Sunday (July 31).
TREDX aims to unite small businesses, financial institutions (FIs), corporations and suppliers to create an online marketplace, TREDXonline, for digital invoices. TREDX will facilitate digital factoring, that is, real-time transactions selling approved invoices from small and medium-sized enterprises (SMEs) to FIs at a discount.
According to M Masrur Reaz, managing director for Think Big, SMEs make up around a quarter of the country’s gross domestic product. But a large number of them have limited access to formal finance.
Reaz said the idea was to make more access to credit, as many don’t have very much collateral, but also have working capital tied up in invoices payable by larger corporations.
“So, factoring as a product is best suited to meet the needs of SME suppliers, wherein the factoring companies and banks could have discounted their approved invoices and provided the suppliers with much needed liquidity,” he said.
See also: Embedded Options Make Tracking Supply Chain Finance Programs Easier
Recently, companies based in the U.S. have been required by the Financial Accounting Standards Board to disclose details on supply chain financing programs.
The firms will now have to report the outstanding balances tied to the programs and the terms of the financing arrangements.
The rule was proposed last December and will take effect early next year. It will address the fact that clearer accounting would spotlight the effects the programs have on the capital and cash flows.
The programs offer a lifeline to suppliers, in which payables arrangements can help buyers pay vendors with third party financing and earlier than usual.
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