Top 10 Benefits of Barter Exchange

Barter exchange or barter trade is a very simple concept: I trade something I have more of than I need for something you have more of than you need. But this simplicity leads many businesses that haven’t joined a barter trade group like iTrade Colorado to underestimate the benefits of this powerful form of business interaction.

And you can look outside the business world for other examples of barter trade’s value. For example, individuals engage in barter every day—even if they don’t think of their actions as barter or label them as such.

John has an abundance of tomatoes from his garden and doesn’t want the unused vegetables to go to waste while he’s traveling on business. Maria provides dog walking services in her neighborhood and would love to find some fresh tomatoes for the salsa she makes and jars as gifts for her family members. A barter agreement is then made very naturally and organically, with John paying in tomatoes for Maria to check on his dog while he’s away, and both parties are better off than they were before.

The same is true on a much larger scale with countries. The exchange of goods can be very beneficial and can even help them address debt and trade deficits.

So, clearly, there are many advantages of barter exchange. But what are the benefits of business barter trade specifically? We list them below.

10 Great Reasons to Use Barter Exchange for Your Business

Companies that engage in business barter exchange enjoy some or all of these 10 benefits:

1. Increased cash reserves. While barter is a form of trade that is increasingly accepted, some types of businesses require cash payments—most commercial landlords, for instance. Consequently, one of the biggest benefits of barter trade is that by using excess inventory and/or capacity to acquire the goods and services you need, you hang on to more of your cash for making payments.
2. Mutually beneficial business relationships. Unlike when executing a transaction with cash or credit, barter is a more engaged process that, when done properly, leaves both parties happy with the outcome. And that shared positive experience helps build strong business relationships.
3. Expanded customer base and increased market share. Companies that engage in barter trade tend to grow their networks of business contacts and customers quickly through word of mouth, as their trading partners talk with their business associates about productive interactions they’ve had. The result can be a company that’s relatively unknown in its industry making great strides toward being an industry leader.
4. A buffer during difficult economic times. When a company’s revenue drops as a result of an economic downturn, having barter relationships can make it easier to “weather the storm.”
5. An easy way to move surplus stock. Surplus stock technically may be a financial asset, but it becomes a liability when it takes up space required for new inventory. Barter helps businesses move stock as needed.
6. Better return on surplus inventory than liquidation. Companies that don’t have barter relationships often have to “liquidate” their excess inventory, in which case they may only receive pennies on the dollar for it. Bartering enables you to get more for your valuable assets.
7. Better overall inventory management. The combination of the benefits above means that companies that engage in barter trade can control their inventories more effectively, as stock comes in and goes out in a more predictable and manageable manner.
8. Less debt collection. Every business owner knows that staying on top of amounts owed to the business is time-consuming and can be unpleasant. With barter trade, the goods and services are typically exchanged very quickly with no requirement for ongoing follow-up.
9. No-interest line of credit. iTrade Colorado members can open a line of credit for making immediate purchases, and there are no interest requirements on this credit line.
10. Option for employee rewards. Businesses can use barter transactions to reward employees rather than cash. In other words, the company lets employees find products or services available on the barter network, and then uses business assets to acquire them.

Even More Business Barter Benefits on the Horizon

The “barter universe” continues to expand as more types of businesses recognize the value of this kind of interaction. For example, a growing number of lodging providers are willing to engage in barter as a way for a company to pay for its business travel.

As a result, getting involved in business barter exchange has tremendous benefits today but also teaches companies to engage productively in this way with other organizations—and that skill has virtually unlimited potential going forward.