Magazine article Black Enterprise

Bartering for Business: Business Owners Short on Cash Trade Goods and Services

Magazine article Black Enterprise

Bartering for Business: Business Owners Short on Cash Trade Goods and Services

Article excerpt

Strapped for cash? Instead of whipping out a credit card or raiding your child's college fund, consider bartering--swapping goods or services with another person or business. Bartering dates back to at least the 15th century, when people traded everything from food to animal hides. But commercial bartering as we know it emerged in the '70s.

Commercial bartering, with over $8.2 billion in sales transactions last year, is growing at a rate of about 10.7% a year, according to the International Reciprocal Trade Association in Alexandria, Va. IRTA serves as an information clearing-house and establishes ethical standards governing barter conduct.

By bartering, a company can generate new sales and higher volumes of business, conserve cash for essential expenditures and reduce unit costs, says IRTA's chief executive officer, Paul Suplizio. "Barter finance allows a company to buy using its incremental cost of production [also applies to international trade]. So long as incremental revenue exceeds incremental cost, it will pay to barter."

Bartering also bolsters the bottom line by enabling firms to trade away excess inventory or resources. A hotel, for example, can fill empty rooms during its off-season, or a print shop can run jobs during a slow time.

There are roughly 600 barter companies serving the U.S. and overseas markets; they are broken down into either corporate trade companies or exchanges. Some 100 trade companies or brokers exchange goods and services on behalf of their clients, mostly multinational firms. …

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