TradeCred Review : Income from investing in Invoice Discounting

Read our detailed TradeCred review that looks into earning income from investing in invoice discounting and other alternate debt modes
TradeCred Review - Investing and earning income from Invoice discounting

In my continue pursuit for passive income and constantly growing the avenues for investing, I keep checking out and testing with my own money the different platforms that are out there. This TradeCred review is written after I invested Rs.2,00,000 of my own money under my name and my wife’s name. Invested with them for a couple of months, bought several deals and withdrew some money to ensure everything is trustworthy and the way it should be.

The screenshots you see below are from my own account and thus far I have made an average return of about 11.5% on my investments on TradeCred. Here is the full review and all you need to know to get started.

What is TradeCred

In their own words, Trade Cred is an alternate debt platform for retail investors such as you and myself. Alternate debts are instruments such as trade receivables discounting (invoice discounting), leasing, bonds, debts etc.

While the team does say they offer multiple types of alternate debts, in my experience I have mostly seen two types assets frequently on Trade Cred which is:

  • Trade Receivables assets where you are investing in a to be paid invoice
  • Debts

What is Invoice Discounting?

To explain it very simply here is a scenario on how invoice discounting (also known as invoice factoring) works:

  • I run a business selling candles on Amazon
  • Amazon sells the candles on my behalf, but gives me an invoice with a promise to pay me my money in 60 days
  • I on the other hand need to pay my staff and other suppliers
  • Since I cannot wait for 60 days I list this promise to pay from Amazon (invoice) on a platform such as TradeCred
  • In this scenario, investors such as you can pool in their money and give me a loan that is backed by this invoice
  • For the money given to me I pay interest to the investors

The concept of trade receivables financing is not new. It has been in existing for as far back as when the Medicis were ruling the banking systems 100s of years back. But, through all this time, this was only done by banks.

Now thanks to the internet, companies such as TradeCred have bought this concepts to retail investors, making it easy for SMEs, MSMEs and even large corporate to crowdfund their invoices

How does Trade Cred work?

Trade Cred allows businesses to list their invoices or debts on their platforms as deals. Investors are allowed to buy a portion or all of the deal. Each deal has a defined start and end time.

The business will then start paying back the interest and principle to the investor throughout the duration of the deal.

❤ You may also be interested in a similar review of Grip Invest which allows you to invest in leases of vehicles and furniture.

Which companies list on Tradecred

Here are a few well known companies I have seen listing their invoices. Note: Some of these invoices may be listed by an intermediary in the name of the actual company.

  • Amazon
  • Firstcry
  • Infosys
  • Godrej
  • Tata Qlik
  • HCL
  • Coca Cola
  • Swiggy& more

Return on Investments (ROI) on investing with Trade Cred

My Dashboard showing the returns and investment summary. Note: I had only invested Rs.1,00,000 into this account. You see Rs.1,02,262 as I had reinvested part of the returns from my first deal.

In the 6 months or so I have been investing with them, TradeCred has been consistently giving me a return of around 11.5% which is pretty decent according to me.

Check out my portfolio with my recent update here. Note, you only see Rs.1,00,000 in the snapshot here whereas in TradeCred on my portfolio, you will see Rs.2,00,000 as I have the other half invested in my wife’s account.

How to invest in TradeCred

Starting to invest on Trade Cred is easier than buying something on Amazon. No kidding. It took me about 5 minutes to submit my details and about a day of waiting for them to approve.

Time needed: 5 minutes.

Steps to invest on TradeCred

  1. Join TradeCred

    Littlesaves has partnered up with TradeCred to be able to allow you to join easily as our referral. Click here to start

  2. Provide your details

    You need to fill in your name, PAN, Aadhar, Email, mobile and DOB. There is no password at this step as you will receive an OTP to log into your account

  3. Submit KYC documents

    KYC requires you to furnish just 2 documents. You need to upload soft copies of your PAN and Aadhar cards. The Aadhar card should not be masked, use the link on the sign up page to download the correct form of Aadhar card. Also, when uploading, ensure you mention the password to avoid delays.

  4. Wait for KYC to be verified

    This usually takes 24 hours. For my account it was done in a day. For my wife’s account I submitted on Friday and it was approved on the following Monday.

  5. Add Money

    Steps outlined below, this too takes two minutes only

  6. Select a deal you like

    From the list of available deals pick the one that has a good minimum investment, investment duration and interest that works for you.

  7. eSign the documents using Aadhar verification

    Now you need to sign the documents to invest in the deal. To do this, simply enter your Aadhar number to verify it is you and you will get a digitally signed document that is legally binding.

  8. Now your investment is complete

    Your account dashboard will be updated in 24 hours. Sit back and watch your money grow stably.

Adding money to TradeCred Account

Adding money is just like topping up a Paytm or Amazon Pay wallet. You can top up your account using Google Pay, BHIM, Amazon Pay or your bank’s UPI system. Netbanking, credit cards, NEFT is not possible.

One irritating thing though is that there is a minimum amount of Rs.50,000. A couple of times I found my self irritated because of this. Here is why. I have a balance of Rs.50,000 in my account. I wish to invest in a deal which has a minimum requirement of Rs.50,300 (example). Now since the minimum top up is Rs.50,000 I had to top up Rs.50,000, invest in the deal and then withdraw the remaining Rs.49,700.

I wish the TradeCred team can loosen up on this a bit.

Tradecred Fees and charges

As an investor, there are no fees or charges for you to invest on TradeCred. Your money is deposited in full and you can withdraw the complete amount with interest.

Taxation and tax treatment of investment and income

All investments and returns are taxable as per your tax rate. Unlike the Gripinvest platform we reviewed earlier, where the returns are post-tax, here the returns are pre-tax. Meaning you need to pay the tax on them.

Buying a new deal

Kinds of deals available on TradeCred

There are three things to keep in mind when buying a new deal

Minimum investment

Though the team says the minimum investment is Rs.1,00,000 I have seen and invested in deals that start at Rs.50,000. This makes the minimum one can invest in a deal to be Rs.50,000.

Having said that, each deal has a different minimum invest criteria, below which you cannot invest. Look at the screenshot above, the Firstcry deal has a minimum amount of Rs.6,59,589 while the BSB deal (which happens to be a debt) has a minimum criteria of Rs.10,35,619.

So choose the deal that fits your investment range. You may have to wait. New deals are listed throughout the day so you may find yourself (I did atleast) continuously refreshing and waiting for the deal that fits your budget to come up. Then again, at 11.5% return, it is worth the wait!

Selling an existing deal

Deals that you own can be sold (liquidated) if you are in need of money. You will stand to loose a bit of the interest earned (not the principle invested) for doing this. Click on the Sell Order button you see next to the deal and follow the process. Someone else on the platform will then buy the deal off you.

Selling a deal to get cash earlier

Is TradeCred safe?

TradeCred from my experience has been pretty stable and safe. The deals listed are from reputable companies such as Godrej and Amazon. The payments are on time and the team is doing a great job in vetting the sellers who are taking money via this platform.

Below is a snapshot of some deals I have successfully invested and cashed out on. I was able to withdraw the funds at once on deal maturity from one of the examples below.

Past deals that matured for me

Does Trade Cred payout?

Yes, TradeCred does payout. Withdrawing money from the platform is done in two clicks. During the first time you need to add your Bank account number and IFSC code. They will deposit Re.1 to verify the account.

After that, anytime you have excess balance in your account, simply click on withdraw and the fund should be available in 24 hours in your bank account. I have so far withdrawn about 3 to 4 times. When I request during working day mornings, I have seen the money hit my account in a couple of hours the same day. If my request is later in the day then the money hits my account next working day. If the request is on Friday (happened to me once) I got the money on Monday.

Pros & Cons

Benefits of investing in this platform

  • Decent returns: Like I said, 11.5% is a pretty decent return and it is to a large extent stable. The major competitors to TradeCred who give invoice discounting to businesses are banks which usually charge anywhere between 15% to 25% at times even more. As such this interest rate may stay around for a while.
  • Easy to start and monitor: The platform is very easy to get started with. Their app allows you to track and buy deals from your mobile.
  • Strong team: The investors who are backing TradeCred seem to be from sound companies and the managing team is experienced to increasing the tract of the platform and business
  • Smooth transactions: This is very important in alternate investment platforms such as these. There are no issues in depositing money or withdrawing money whatsoever.
  • Passive Income: This happens to be a good source of Passive income for those looking to build a stream of passive income.

Issues with this system

Not everything is great either. There are a few minor issues that can be done better:

  • The web interface and app are not modern and slow. They feel like they were built in the early 2000’s. Hope the team brings a new interface with a more robust platform soon
  • There are just not enough deals. The deals are subscribed very quickly. I have seen deals worth several crores gobbled up by investors in a few minutes. So you need to be fairly quick in selecting and investing. I understand that this is because the team is picky to ensure that only trustworthy companies list with them, so there is very little chance of default.
  • That minimum deposit of Rs.50,000 I mentioned earlier, I hope they relax this to make it easy for small investors like me.

Our TradeCred Referral

Littlesaves has partnered with the team so you can now join TradeCred through the referral backing of Littlesaves to easily open a paperless account and start investing in no time.

Start earning some passive income

Some frequently asked questions

Is TradeCred safe?

Yes, TradeCred is backed by strong founders, management team and investors. They partner with reliable companies such as Amazon and Tata to ensure null defaults, making them safe.

Is invoice discounting a good idea?

Yes, for businesses who have a capital crunch, the easiest way to get money quickly without going through lengthy loans or mortgages is by discounting (factoring) invoices and trade receivables

What is the minimum investment for Tradecred?

The minimum amount you can deposit is Rs.50,000. Similarly the minimum deal amount is Rs.50,000

Is there a minimum withdrawal amount on Trade Cred?

There is no minimum withdrawable amount. You can withdraw any amount available in your wallet to your bank account

Is there a minimum deposit amount for Tradecred?

The minimum amount you can deposit into your wallet is Rs.50,000

How can I add money into TradeCred?

You can add money using UPI via your bank, Google Pay, Amazon Pay, Paytm or BHIM app.

What are the risks in invoice discounting?

The major risk of invoice discounting is when the company who has taken the loan defaults or goes bankrupt. Selecting stable companies or deals that come with a certain guarantee can mitigate this risk to a certain extent.

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Abhi

Abhi is a 29 yr old Indian, on FIRE to retire by 40. He has been investing and learning Finance for the past 12 years. After completing Mechanical engineering, he started working in a multi-national Bank and grew to become an AVP. Currently with an IT MNC as a VP. He lives in Bangalore with his wife and their 1 year old daughter. In his free time, Abhi loves to game on the Xbox, watch movies, read and blog.

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