Barter and Its Benefits

Posted by By Peter Viliamu on: 2005-06-20 20:15:00

What is Barter?
Barter involves 2 parties. Each party wants to trade with each other and instead of exchanging cash for products or services, the exchange is carried out with products or services that each possesses. That is, there is a trade of a product or service that someone has, in return for another product or service the other party has.

Barter traces its origins back to ancient times, because as we all know, money as a form of exchange only came into being in history well after barter had been practiced for 100's of years. It was found that using money or coins as a medium of exchange was a lot easier to handle than exchanging products or services.

Barter can basically apply to almost any business that has products or services, because if they have something they can sell and exchange for money, then they can sell in exchange for products. Simply defined, therefore, barter is the exchange of goods and services without the involvement of cash.

Most of us, when young, engaged in barter, even if we didn't know we were doing so. For example, if you have ever traded your comics with a friend in exchange for his baseball bat or rugby ball, then you have engaged in the practice of barter. If you have helped your neighbour paint her fence in exchange for her cooking you a chocolate cake, or if the gentleman across the road helped you repair your car in exchange for borrowing your lawn mower, then you have been involved in the art of bartering.

The Art of Bartering
Some large companies have been engaged in barter for many years. It is something your business should consider because it has many benefits and can produce increased sales and conserve cash in some situations. As already explained, we have all bartered in some form or another, but it's only recently that the industry of barter has come into its own.

With the new technology available to businesses now, computers can track barter transactions and inventory and this has helped to expand the growth of this form of trading. In fact, now there is such a term as the "barter economy", as quite distinct from the "cash economy".

We have now grown what are known as "barter exchanges". These are groups that create markets for traders to function and come together to barter. Barter exchanges have also assisted in fuelling the huge growth of this industry. Today the barter industry is a billion dollar industry many times over and has become a very successful method in assisting in the growth of companies and facilitating trade without the use of cash.

There is no doubt that barter is big business and it's getting bigger year by year.

Why should you Barter at all?
The main reason businesses use barter is to conserve cash resources. As cash is the lifeblood of a business, any strategies to conserve this are welcomed with open arms. However, barter is more than saving cash; it is a method of marketing your goods and services and carrying on normally where products and services are exchanged, except cash dollars are replaced by barter dollars.

Barter definitely attracts customers and therefore sales the business would normally not have obtained otherwise. This is because a barter oriented business would rather use the barter facility than to outlay cash. This is acceptable, therefore, to all businesses that enjoy the barter system.

Barter generates sales that would not have happened if cash had been required to complete a purchase by the buying company. It's good also because it provides another advantage to a business. Where cash is short, the option of barter can ensure that a sale is not lost and, in fact, can grow sales figures substantially.

It enables expansion because it frees up the company's cash reserves for other needs, as well as reducing holdings of excess stocks. The fact that a business can achieve growth without the need for real cash, makes barter an attractive proposition that needs to be seriously investigated.

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