Have you ever faced any of the following situations?
One: You need a lawyer but you don`t have the cash for
the retainer. Two: You have a warehouse full of
inventory that just isn`t moving. Three: Sales are
down and you need more customers.
Each of the above problems might be alleviated by
bartering.
1. What Is Bartering?
Bartering is simply exchanging goods or services
without money.
For example, you give your accountant and his family
a meal in your restaurant in exchange for the
preparation of your income tax return. This is a
barter transaction because no cash changes hands
between the two parties.
2. Bartering Improves Liquidity and Profits
A shortage of cash is not an unusual situation for
either businesses or individuals. Perhaps you would
like to advertise in a certain publication but just
don`t have the money. Have you considered exchanging
something of value that you have (a service or product)
for the advertising you need?
Such a barter deal is mutually advantageous. Neither
party has to part with cash to obtain the desired goods
or services.
Not only does bartering conserve cash, but it can
actually generate sales and profits. Inventory turns
over more quickly. Service providers sell more of
their time than they would had they insisted on cash.
3. Bartering Creates New Customers
Notice, also, that both parties just made a sale to
someone they wouldn`t normally have. You both just
received a new customer.
If happy, your new customer can refer you to many
more customers, including ones who pay cash. Perhaps
your original barter customer may also start paying
cash in future transactions with you.
4. Barter Exchanges
In addition to trading with individuals and
businesses, you might consider joining a barter
exchange.
A barter exchange is a business that facilitates the
exchange of goods and services between its members.
There are membership fees for joining. Also, the
barter exchange charges a commission on transactions
made through it.
5. Tax Aspects of Bartering
Barter transactions made by your business must be
reported for income tax purposes. Also sales taxes
may apply on such transactions.
For increased liquidity and new customers, consider
bartering your way to profits.
