Having started my investment in 2018 ,it’s almost close to 3 years investing on TradeCred (Free Link).I started at the same time as Kredx investment
TradeCred has been a very good experience for me and I have to applaud the platform for it ,considering we faced Covid-19 which was 6 sigma risk event for most investment . Interestingly I never faced any delays in my invested Invoices during that period. My portfolio yield has been over 12%
Some other invoice discounting platform like Kredx did not do that well and delay were reported for some invoices. The major reason for this is that few platforms were desperate to do lot of volume to increase valuation at the cost of credit quality of invoices!
Invoice Discounting provides a unique opportunity of discounting invoices raised on big players in the consumer space. The vendors have to wait for 30-90 days to receive the money from the companies, so you can provide liquidity to vendors and earn an attractive yield.
Top TradeCred Partner for Invoice Discounting
Some of the top corporates available on TradeCred for investment are:
- Axis Bank etc
My Portfolio Performance and Analysis
Few Deals I had Invested in last year
Average Yield 12.3%
Average Tenor 80 Days
In my three year experience I never faced delay of more than 4-5 days which is commendable.
Some interesting products they had come up during last few months
- Instant Liquidity Options
- Bank Guarantee
- Insurance cover for Default
- TradeCred Minimum Investment for few deals reduced to INR 50000
TradeCred Way Forward
I am targeting primarily 3 types of invoices on this platform
TradeCred Bank Guarantee Deal
A bank guarantee is an assurance that a bank provides to a contract between two external parties, a buyer and a seller, or in relation to the guarantee, an applicant and a beneficiary. The bank guarantee serves as a risk management tool for the beneficiary, as the bank assumes liability for completion of the contract should the buyer default on their debt or obligation. TradeCred has deals which have bank guarantee by Federal Bank,Union Bank etc
Settlement Finance Deal on TradeCred
Settlement Financing is a unique product that addresses a specific trade credit use case in India. When a consumer swipes a credit/debit/atm card, the amount is deducted from his/her account immediately. However, the merchant (receiver) has to wait 1 day for these funds to reach their account from the bank. This 1-day capital gap causes cash flow issues in businesses. Settlement financing provides 1-day loans to business that want to reduce their cash flow impact while waiting for transactions to settle from the day prior
Detailed article on settlement finance
Prime/ Blue Chip Company Invoices on TradeCred
These are the companies or business which have strong balance sheet or have great valuation . Blue chip companies are easy to identify. To identify good startup it’s important to read about lastest funding and growth reports
Regardless of the type of deal two parameters to keep in mind are:
- The vendor should have done multiple deal on the platform.This ensure chances of fake invoice is low.
- Check online to ensure that there is no adverse news about the company. Recently in one of the platform Future group delayed repayment. Future group was already struggling with high debt and people could have avoided investing in it if they had done some due dilligence.
TradeCred vs Kredx
I find Tradecred superior to Kredx in the following departments:
- There is always a shortage of deals on Kredx which means more money lying idle which cause interest drag.Also in this case investor gets to invest only in invoice which others choose to avoid.
- Kredx had a few defaults in the past while Tradecred has a clean history even during Covid-19 lockdown
- TradeCred has credit enhanced deals like Bank Guarantee or Instant Liquidity which are value adds.
TradeCred (use link to get early access to deals) has consistently delivered 12% + return without delays. Considering the short nature of this investment it is a good place to park money along with other platform like Finzy , GrowFix , Grip Invest and wait for equity correction considering that equity is unlikely to give 13-14% return from current level ( i.e 17000 by jan 2022!) but has high probability of correction to lower level