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Dhaka Tribune

First digital factoring platform for SMEs goes live

Factoring is a financial arrangement under which a firm sells its accounts receivable or invoices to a third party at a discount to meet its immediate capital needs

Update : 31 Jul 2022, 05:21 PM

Think Big Solutions, a local fintech company, on Sunday launched a digital platform on factoring to provide financing solutions to small and medium enterprises (SMEs).

Tredxonline, the platform, aimed to bring together SMEs, financial institutions, corporations and their suppliers to facilitate access to supply chain finance for SMEs, Think Big Solutions said in a statement on Saturday.

M Masrur Reaz, managing director of Think Big Solutions, said SMEs account for one-fourth of the country's gross domestic product but still, a large number of them have limited access to formal finance.

Micro, small and medium enterprises are always struggling for access to credit as they sorely lack collateral. Besides, SMEs also have their working capital stuck in invoices that are 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.

Factoring is a financial arrangement under which a firm sells its accounts receivable or invoices to a third party at a discount to meet its immediate capital needs.

"But even though factoring has been available in Bangladesh for over a decade, factoring as a product class has not actually taken off," Reaz added.

The managing director went on to say that TREDX will ensure that suppliers of good corporations always get the best discount rates and the corporations themselves will be satisfied that their key suppliers always have access to low cost funds from all financial institutions.

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