Digital platform Invoicemart eyeing ₹11,000-crore business in two years

Invoicemart, a digital invoice discounting platform for MSMEs, expects to process business volumes of ₹11,000 crore in next two years, a top official said.

This is one of three Trade Receivable Discounting Systems (TReDS) — basically online marketplaces — approved so far by the Reserve Bank of India to bring together buyers, sellers and financiers for discounting MSMEs’ invoices and provide them with timely funding.

Buyers, sellers and financiers have to execute bilateral agreements with the TReDS platform to transact.

Invoicemart, which is promoted by A.TREDS (a joint venture of Axis Bank and mjunction services), has till date on-boarded eight financiers, 25 buyers and 50 sellers. So far, 250 MSMEs have tapped the digital platform.

Most of the financiers/lenders are foreign and private banks and the only public sector bank registered on this platform is Bank of Baroda. Talks are on with other public sector banks.

“There is huge upside and demand for what we are offering. We see only exponential growth in the coming years,” Kalyan Basu, Managing Director and CEO, A.TREDS, told BusinessLine.

In the first six months of its existence (from July 2017), this digital platform has already processed invoices to the tune of ₹200 crore.

“Business is new. Growth has to be exponential. It would not be right to compare or benchmark our business aim (₹11,000 crore throughput in next two years) with ₹200 crore achieved so far,” Basu said.

Basu reeled out data to buttress the point of huge unmet demand for MSME financing in the country.

“In India, the total demand for finance for the MSME sector is about ₹26 lakh crore. The amount provided currently by banks and other non-bank institutions is about ₹14 lakh crore. There is still a gap of ₹11-12 lakh crore. A major portion of this gap is going to be met by digital platforms such as ours. There is huge demand,” he said.

One of the big benefits of TReDS is that MSMEs are not required to give collateral and there will be no recourse to them in case of defaults, Basu said. “Banks are not going to go after MSMEs but after the buyers of MSME products and services,” he said.

Invoicemart also hopes to ride on the government directive asking Central public sector enterprises to come on board this digital platform. Plans are afoot to bring even State governments on to the platform

Basu said that Invoicemart is in talks with insurance regulator IRDAI to see if some form of insurance cover (credit insurance) could be provided on the MSME invoices coming up for discounting to the TReDS digital platforms.

“Just as ECGC has been functioning beautifully in the last 30 years to protect small exporters, we also need a similar product for small MSMEs to cover default by their buyers in the domestic market.

“IRDAI should come out with a scheme where insurers — private or public sector — provide cover for small MSMEs coming to TReDS. Then only will this platform be able to give value to MSMEs and expand,” Basu said.