Bartering is trading of goods and services, without the money exchanging hands.
Ancient civilizations heavily relied on this type of practice but with the advent of money based economy, bartering is just a viable option for the businesses.
Many businesses are taking the advantage of this growing phenomenon of bartering over the internet.
This age-old phenomenon is still alive and well in practice even in stable economies as it is assumed as a practical protection against inflation.
Bartering is a cashless exchange system where two or more parties trade services or goods, without the involvement of cash.
It is a medieval marketing system but it still exists in the modern business world.
Get access to the desired assets without paying cash
The unstable economies have given a fresh impetus to the system. The bartering typically exists in the shape of service, trading space or supplies.
Let us take an example.
A design agency offers a branding consultation in exchange for sometime in a reputed TV channel studio.
Businesses can reach a barter agreement directly but most of the businesses engage barter exchanges that facilitate plenty of deals, online or offline .
The most obvious benefit of bartering is, it allows a business to access other businesses offering the services or the products they’re looking for, without any cash involvement.
An impressive way to obtain the real value of not-so-useful products
This is the smartest way of obtaining the value for your assets with no spending.
Hence, there is little wonder that barter exchanges have reported serious growth, more particularly in the post-pandemic period.
It allows businesses to extract value from the parts of the business that might have gone unused. The procedure also betters your brand visibility.
Sometimes, the value of the barter does not match up, and in such conditions, the involved business owner needs to be super careful about what he/she offers and looks to receive in exchange.
Comprehensive planning is the key to mutually beneficial bartering. Before taking a plunge, a business owner must understand the difference between a barter and a barter exchange.
Direct bartering works when you already have a company in mind that is open to bartering.
However, if you’re in the market for multiple barter contracts, a barter exchange is the most appropriate place to head to.
Importance of trade currency in bartering
How does bartering work? By definition, barter exchange is the service that helps you find what you’re eyeing. It operates via trade currency.
When someone buys your services or goods, you get this currency that can be spent in any of the future exchange deals.
Of course, you need to pay some fees, but it is worth it due to the increased flexibility.
If you’re in the US, you need to pay income and sales tax on barter exchanges as it is viewed as equivalent to cash transactions.
Whereverat a normal transaction will not happen. Do proper research before entering any agreement, and it might indicate that the business approaching you fits the bill.
Also, avoid devaluation of your products or the services so that you don’t miss out on the sales revenue.
The first step a business needs to take in bartering
First-of-all, decide what you’re going to offer in the bartering procedure. Just establish what you can supply, and don’t waste time about what you will gain from the deal.
Note down the list of your business assets to determine what exactly you require. Also, identify how much you afford to offer in each area.
Additionally, work out the appropriate value of the assets on the offer.
This is an inexact science, but you need to determine an estimated figure.