F.A.Q - Frequently Asked Questions:
What is Barter?
Barter allows you to buy what you need and pay for it with otherwise unsold products and services --- without the use of cash. A leading barter company executive, when asked "How big is the barter business?", responded by saying "No one really knows how big it is because companies won't talk about it." "They're not advertising it," he said. "They don't want their competitors to know about bartering."

"Whatever it is --surplus or seasonal inventory, a discontinued line, canceled orders, store returns-- you can trade it, rather than liquidate it, and recover the value that has been lost," says an executive of one of the oldest bartering companies in America.

What are the three primary sectors within the barter industry?
Small Business Exchanges. Store owners and small retailers trade among themselves for anything from stationery to eye exams in order to avoid a cash outlay. There are about 400 exchanges nationwide.

Corporate Barter. Companies can get rid of excess inventory, penetrate new markets and expand sales while avoiding costly write-offs, maintaining working capital and net worth, improving earnings and increasing cash flow.

Worldwide, bartering is known to be very profitable despite the lack of formal records. Analysts say that Asia alone has a bartering business worth $90 billion a year.

Countertrade. This involves a majority of large multinational companies that sell to countries that have weak currencies or require that partial payment be in goods. This form of trade has been on the increase for years, and is estimated to currently represent about 40% of the world economy.

How can I barter outside my own city?
Trade exchanges participate in reciprocal trade relationships with other exchanges across the country -- offering a multitude of additional barter opportunities. The ability to use trade dollars, acquired by selling a product through your west coast exchange, to buy products from an exchange in the east, is accomplished thru the reciprocal trade organization. The more than 400 exchanges in the US, have an average membership of 550.
How will my business profit from barter?
Barter produces new business -- allowing you to expand your market and maintain your cash-paying customers.

New distribution channels are possible. If you are liquidating a product (or product lines) you may want to sell those into international markets to protect your local markets. However, barter no longer is just an option for unloading distressed merchandise, it has been used by companies as a creative tool for expanding sales and penetrating new markets.

Barter conserves cash. Say you have ten vacant hotel rooms at $100/night and you need a new copy machine priced at $1,000. Barter provides a way in which you can buy your copier, fill your empty rooms (at your cost on the rooms) and maintain your cash. The same is true with filling empty tables for a restaurant. Plus, barter provides added earnings potential for your wait staff.

Barter puts ideal resources to work. Excess capacity is converted into needed goods and services for your organization.

Barter provides a competitive edge. Barter clients are new clients that bypass competing companies to do business at your establishment while you maintain your existing cash clients.

How does barter work within a trade exchange?
A trade exchange eliminates the limitations of one-on-one trading where each business must want what the other business has to offer. Clients of an exchange use trade dollars, instead of cash. to handle their transactions. If a hotel trades $1,000 worth of rooms to another client, the hotel receives $1,000 in trade dollars which it can use to purchase what it needs from other exchange clients.

An exchange acts as a third party record keeper, providing monthly statements to clients, which reflect all trade purchases, sales and a current trade dollar balance.

How does a "Credit Line" work with bartering?
A credit line, offered by a growing number of barter exchanges, is basically an extension of barter credits, which allow a business to buy essential items from other network members before selling its own goods into the system.

(ie;) A barterer who owns a roofing company, which means he can perform his work only during the warm months, uses the credit line during the winter to fix his trucks and get his advertising campaign ready.

If you apply for credit, expect barter companies to check your credit rating and vendor references, although the application process should be easier than with a bank loan; on credit lines worth more than $10,000, owners may also have to sign personal guarantees. Although you'll pay interest on purchases you make with your credit line, you'll be able to pay back interest and principal with bartered goods rather than precious cash.

What companies are involved in barter?
Nationally, over 250,000 businesses are involved in barter. It is estimated that 65% of the Fortune 500 companies engage in barter to one degree or another. Include on this list are PepsiCo, Inc., Pizza Hut, Casio, General Electric, IBM, Amoco, Caterpillar, 3M, Goodyear, Xerox, Pan-Am, Chrysler, and Hilton.
What are the "HOT" barter products?
Office space is a Hot trade. A recent innovation is bartering goods and services for excess office space. Trading advertising time, hotel rooms, or office equipment, among other goods and services, for tenant subleases on unused space across America.

Real estate bartering activity could push the transaction values into the $100 million range. Financial institutions have foreclosed properties on their books, and corporations have closed plants; in both cases, the balance-sheet impact can be severe. "Real estate can bring an awareness to senior management that a merchandise deal might not. It's a hard asset that the corporate controller will be well aware of and trying to figure out how to use. When the menthol of disposition becomes barter, that get attention," remarked a leading barter executive.

Some barter firms are venturing into entirely different areas. "We go further than just trading space for goods. Right now we're trading construction equipment, putting up buildings, and renovating offices," says one of the leading barters in the country.

How do I select a barter exchange?

  • Compare services and fees of barter exchanges in your community. Check the listing of member businesses and their locations to be sure you can get the goods and services you need.

  • Find out how much advertising the exchange does for its members.

  • Determine how many members of the exchange's total membership are currently trading and how many are on standby or on hold status (meaning they have bought substantially more than they have spent, or vice versa).

  • Get a referral list of the exchange's members, and ask them whether they are satisfied with the services. Also, make the usual business reference check with the local Better Business bureau or chamber of commerce.

Are there any tax advantages to barter?
Barter income is business over and above your normal cash sales and is treated the same as cash income. Trading should be considered a marketing tool, not a tax tool. As with cash income, trade purchases that are business-related are also tax deductible.
How do I get started bartering?
Complete the Membership Application Form.