A trade exchange can be defined as a community or association of businesses trading goods and services using mutual credit outside of the cash economy. Although the concept of barter is thousands of years old, bartering through a trade exchange combines modern technology, a community of businesses, and marketing channels to increase profits through new customers and improved cash flow.
Bartering in the modern age
Bartering dates back as far as c9000 – 6000 BC with the domestication of cattle and cultivation of crops which were then used as a form of payment in many different societies. Under the primitive conditions of a barter economy, the services of all persons were exchanged directly. Take a master, for example, he would reward his servant with protection, food, and shelter. Between equals, goods of one kind were exchanged for another kind. However, there was one major disadvantage – the equality of trade between the parties – chicken versus cattle. Barter, therefore, evolved into a part goods, part credit equivalent where the goods were assigned a value, the trade took place and the balance was returned to you in credit, cowrie shells or money.
Since those times, Barter has become more sophisticated with the introduction of trade exchanges offering an independent economy.
Today officially recognised barter transactions represent approximately 40% of the world’s economy, and 85% of the US Fortune 500 companies engage in barter one way or another to increase their market share and improve productivity. An estimated 10 billion dollars in sales are currently transacted each year by the commercial barter industry alone.
Why do businesses join a trade exchange?
- The fundamental benefit that attracts businesses to a trade exchange is the principle of maximising unused capacity, whether that’s time or inventory, and effectively increasing revenues and customers without displacing their existing cash business.
- An interest-free line of credit can be utilised, thereby conserving cash and improving the company’s balance sheet.
- Businesses are assured of secure internet transactions, a pre-approval process and comprehensive record keeping.
Bartercard, the world’s largest trade exchange, is a business-to-business (B2B) marketplace assisting members to grow their customer base. Simply put, Bartercard members pay for products and services between each other with their own product or service instead of paying cash. Transactions in Trade Dollars are routed through Bartercard, an independent self-insured third-party record keeper who stores relative member credit and debit balances. This overcomes any weaknesses associated with primitive barter conducted directly between buyer and seller.
If you think a trade exchange would suit your business, contact us today here or give us a call on 0800 639 287.