originally posted on http://www.associatedcontent.com/article/8054085/bartering_financial_advantages.html?cat=3
Bartering is now becoming a popular business solution in Canada and the United States, here are some additional advantages.
Bartering offers a number of financial advantages to those companies that do it. Bartering:
- Improves cash flow: When you can avoid spending money for goods and services that you need to run your business ‘” resulting in a decreased flow of cash out of your company ‘” you’re improving your cash flow. Remember, however, that every business needs cash to function. Trying to run a 100 percent barter business wouldn’t be practical ‘” you must have cash available to pay employee salaries and pay vendors who aren’t in the mood to accept whatever you have to barter. (For example, good luck trying to get your local electric utility to accept printed circuit boards in lieu of cash when it comes time to pay your electricity bill or to get your employees to split 10,000 pounds of goose down in lieu of paychecks!)
- Frees up cash for other uses: Bartering enables you to conserve cash, freeing it up for other uses. If, for example, you need to purchase photocopiers and personal computers, and you’re able to barter some of your own goods or services for the photocopiers, you’ll have more cash available to purchase the personal computers you need. You then have several options available: Either buy more computers, buy better computers, or simply redirect the cash savings to another purpose.
- Converts excess inventory: Finding yourself stuck with excess inventory is not difficult. All it takes is an unexpected downturn in the economy, a change in buyer preferences, or an unseasonable change in the weather, and your shelves can be chock full of product that’s going nowhere fast. Bartering can help you convert this excess inventory into something that your company really needs while putting your inventory to productive use.
These reasons alone compel many companies to make barter a part of their financial mix. By reducing the need for cash, bartering can reduce your need to secure financing from outside sources ‘” creating a healthier bottom line for your company.