PrintBarter has been around as long as humans have walked the earth. But that doesn't mean it doesn't have a place in a modern economy. In fact, over the past few years, barter has gained new prominence as a practical way for companies to acquire goods and services without laying out precious cash.
Barter exchanges, which emerged in the mid-1980s, have become an attractive business option. These exchanges bring together businesses and provide "barter credit" systems that merchants can use to purchase goods and services from other exchange members. Barter credits make it possible for a company to "sell" items to one partner and to "buy" items from another. Exchanges also provide important record-keeping, accounting and fraud-prevention services for their members.
Why Barter?
Every company deals with excess goods or services. A manufacturer might miscalculate demand and overproduce, or it might have excess production capacity. New product launches might leave a firm with obsolete stock. Service providers often have unsold assets (a hotel may have available rooms) or time (an accountant can take additional clients). Normally a business might allow excess capacity to go unused or sell excess inventory for pennies on the dollar simply to get rid of it.
Barter exchanges turn these wasted resources into profit, and they allow businesses to acquire goods and services without spending cash. A printer might, for example, sell unused time on its presses to a publisher who pays for the exchange with barter credits. The printer will then use the credits to purchase office supplies from a retailer. In the process, the printer takes a non-performing asset — its idle presses — and uses it to acquire products it would normally buy with cash.
Barter Exchanges: A Match Made in Heaven
True one-on-one barter isn't very productive; it requires a business to find partners that have exactly the goods or services it needs. Barter exchanges streamline this process by aggregating hundreds or even thousands of firms that offer a wide variety of items. Members can use their barter credits to get what they need quickly and easily, without wasting time and effort on direct exchanges.
Barter exchanges offer other important services. They track each member's barter credits, and they can even finance a member's initial purchases with advance credits. They also provide record keeping for tax purposes. (As far as the IRS is concerned, barter is identical to cash trade, and firms must declare barter income.) Exchanges may screen potential members, mediate disputes, and discipline members who violate exchange rules.
Getting Started with Barter
If you think barter might help your business, the first step is to find the right barter exchange. Different exchanges have different types of merchants; some focus on large companies while others target small businesses. Some exchanges are entirely Web-based and global, while others operate offline and keep a local focus.
There are now more than 500 barter exchanges in the United States alone, and most of them belong to one of two major industry associations: the National Association of Trade Exchanges, and the International Reciprocal Trade Association. You can also find barter exchanges through your local Yellow Pages or Chamber of Commerce, or through a business or professional association.
