As invoice discounting gains credence, Amazon-backed M1xchange aims to double its business

A small vendor from Gujarat supplying chemicals to a large petroleum corporation listed its invoice worth Rs 1.5 lakh on the M1xchange discounting platform. After the corporation approved the invoice, the vendor received multiple bids from banks within minutes.

The vendor picked the best bid—the one with the least waiver—and almost immediately received the funds from the bank. This money will help the vendor produce another batch of chemicals for another client.

The online bidding, witnessed by YourStory, represents a typical scenario on the M1xchange platform, wherein at least three to four banks bid on each invoice put up by small and medium enterprises.

M1xchange is one of the four regulated trade receivable discounting (TReDS) platforms in India, alongside RXIL, A.TReDS, and C2treds. The online platform allows small and medium-sized businesses—like the vendor from Gujarat—to discount their invoices to receive payment faster. This way, vendors don’t have to wait for payment from their clients and have adequate funds to cover their working capital needs.

Amazon-backed has M1xchange has helped businesses encash invoices worth more than Rs 1.3 lakh crore since its inception in 2017. In FY25 alone, the fintech firm aims to discount invoices worth Rs 72,000 crore.

FY24 has been a year of robust growth for the M1xchange platform. It achieved a 104.8% increase in revenue, reaching Rs 52.95 crore, compared to Rs 25.85 crore in FY23. Its profits grew nearly six-fold—from Rs 1.65 crore in FY23 to Rs 9.44 crore in FY24.

The platform expects the growth to continue this year as well, with revenue nearly doubling.

Sundeep Mohindru, Founder and CEO of M1xchange, in an interview to YourStory, says M1xchange’s revenues are set to cross Rs 100 crore in FY25, and profitability will continue to rise. He also aims to onboard 500 corporates and double the number of MSMEs on the platform in the current year.

Currently, M1xchange has 40,000 SMEs and 1,500 listed buyers on its platform.

What makes M1xchange bullish about its growth prospects? Mohindru attributes this to growing awareness of invoice discounting as a viable financing option among small and medium businesses and the government’s support to MSMEs and thrust on exports.

Recently, the government reduced the turnover threshold for buyers to get on the TReDS platform —from Rs 500 crore to Rs 250 crore. This is likely to bring 7,000 companies onto the TReDS platforms, says Mohindru, who is also a promoter and director of the platform.

“With outstanding MSME dues exceeding Rs 21,000 crore, as reported on the Samadhan Portal, this significantly expands access to timely, structured financing options. It facilitates prompt payments for MSME goods and services, addressing a major pain point in the market.”

How TReDS works

Imagine you are an MSME supplying raw materials to a large corporate client. You’ve just delivered a shipment, but the payment is scheduled for 30 days later—a standard practice in the industry. 

However, you need working capital immediately to produce another batch of materials for another client, and asking for an advance is not an option.

Before 2017, your choices for addressing the working capital issue were limited. Typically, you’d approach a bank for a loan at a high interest rate, along with collateral requirements. But if your assets are already pledged against a prior loan, this can be a roadblock.

In 2017, the Reserve Bank of India introduced a solution: the trade receivables discounting system (TReDS). The platform allows you to convert trade receivables into cash without collateral. 

It enables you to sell your invoice for a large corporate client at a discount to banks or NBFCs that bid for the invoice. The financial institution that wins the bid disburses funds almost immediately. So, instead of waiting for 30 days or more for payment from the client, you have immediate cash for your working capital needs. 

On the due date, the corporate client pays the financial institution the original invoice amount.

From tackling early challenges to tasting success 

While M1xchange has clocked a strong financial performance in FY24, on the back of strategic operational efficiency, as detailed in its recent earnings report, its early days were not a cakewalk.

When TReDS was introduced, it was not easy to convince large corporate buyers to participate on the platform and validate invoices. 

“Initially, corporates were resistant, questioning as to why they should come on board for something that seemingly only benefitted SMEs,” Mohindru recalls.

“The rate of discount that the SMEs were getting on M1xchange ranged between 7% and 10%, compared to the 12-20% interest they’d pay outside the platform. This saving was due to the corporate’s goodwill; so we encouraged SMEs to share a part of this saving with their corporate clients,” says Mohindru.

With SMEs sharing their savings, corporations saw a tangible financial benefit from participating on the platform. Over time, their initial hesitation gave way to fruitful engagement.

Due to the disruptions caused during the COVID-19 pandemic, supply chain resilience became a priority, leading corporates to back SMEs to ensure continuity.

Corporations realised that supporting their suppliers enhanced their own supply chain’s resilience and digital efficiency. The end-to-end digital nature of the platform meant that every invoice approval, payment, and transaction could be monitored seamlessly, thus reducing the administrative overhead associated with traditional payment methods.

Mohindru emphasises, “Post-COVID, companies became more digital-savvy, realising that digitising their supply chain would bring cost reductions and efficiency.”

As a result, large corporates not only agreed to board the platform, they were also open to using their own credit score to enable SMEs to avail themselves of invoice discounts.

In the initial days, engagement from banks was also a challenge, as they were unaccustomed to the platform’s bidding model.

“The banks initially asked, Why should we bid? The SME needs money, and they come directly to our branches.”

However, Mohindru explains, banks soon realised that the platform allowed them to expand their SME portfolio without investing in physical branch infrastructure.

“Today, banks recognise this as a business opportunity with no overhead investment. They come onto our digital platform and access the entire customer base in one place,” he says.

This digital-first approach has attracted over 65 financial institutions, including SIDBI, SBI, and Yes Bank, all of whom actively bid on invoices, creating a competitive environment that ultimately benefits SMEs with lower financing costs.

The competitive bidding model has become a core strength of M1xchange, where invoices are openly bid upon, resulting in the best rates for SMEs, says Mohindru.

“On an average, we see three to four banks bidding on each invoice, driving down the cost of finance for SMEs … Banks are very aggressive now,” he notes.

Cross-border financing

In an extension of its service offering, M1xchange has launched a cross-border financing platform within India’s GIFT City, where international banks can also participate in financing Indian exports. 

This initiative aims to make export financing more accessible and affordable for Indian exporters, with discount rates that are typically 1-2% lower than domestic options. 

"International banks familiar with the buyer take on the credit risk and finance the transaction, providing liquidity to Indian exporters,” remarks Mohindru.

He is confident that cross-border trade financing will take off in the coming days, thanks to the government’s push to expand exports.

“The government has big aspirations for India to become a global leader, and exports are at the heart of this vision. For India to achieve its goal of becoming a $5-trillion economy, exports will need to grow many times over.”

The cross-border initiative marks the beginning of M1xchange’s global expansion plan. The platform has launched the TReDS solution in Nigeria and aims to expand further in Africa, leveraging the technology infrastructure that exists in India. 

“With the same system, we’ve been able to offer financing to Nigerian SMEs who are now able to discount invoices from Nigerian corporates. We’re exploring new African markets and expect to launch in more countries over the next 6-12 months,” says Mohindru. 

Competition

M1xchange competes with heavyweights in the market. RXIL is a joint venture between prominent financial institutions SIDBI, NSE, State Bank of India, ICICI Bank, Yes Bank, and Axis Bank. 

Another entity is Invoicemart, a digital invoice discounting platform by A. TREDS, a joint venture between Axis Bank and mjunction Services Ltd., a B2B ecommerce company.

RXIL, which reported a profit of Rs 8.5 crore in FY2022-23, is reportedly targeting a 35% share of India’s invoice discounting market this year. 

Despite growing competition, Mohindru is optimistic about the opportunities for M1xchange.

“All platforms are doing well, and there’s no clear winner in the market as of now,” says Mohindru, highlighting that competition remains balanced within the regulated space. Each platform holds roughly an equal market share, he adds.

A relatively new platform is C2treds, operated by the US-based working capital platform C2FO.

Exciting times ahead

The director of M1xchange believes that MSMEs and exporters are in for exciting times, bolstered by the various measures taken by the government and regulators to make financing easier and more accessible. 

“Our platform is one part of this effort, helping SMEs and exporters access financing from multiple sources and increasing liquidity in the system,” says Mohindru.

“What’s really exciting is how this de-risks SMEs. When an SME discounts an invoice, they don’t have to worry about delayed payments or defaults from their buyers—that’s between the bank and the buyer. This not only makes things smoother for the SME but also strengthens the overall ecosystem. With initiatives like these, the future of India’s export growth looks very promising."

(The copy was updated to correct a data point.)