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Business to Business bartering

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The dictionary defines bartering as the ‘exchange of goods and services without monetary transaction’. It is simply an exchange of goods between two parties, who need something from each other. This mutual give and take has been practiced since antiquity, but has had its share of problems too. Picture this, a fishmonger wanting a new fishing net goes to a net maker with a handsome catch of fish. But the net maker isn’t interested in his fish. So, the fishmonger has either to remain without a net or make one on his own. And he can’t do either. So, he exchanges his fish with someone else for an item that the net maker would be interested in, and exchanges it to get his fishing net. This is what happened till money made its appearance.

Bartering has not just stayed alive through time, it has made a significant come back in the business world. The International Reciprocal Trade Association reports that bartering today is a whopping six-billion-dollar business-to-business success story worldwide.

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Benefits

Conserves cash: Cash, the lifeblood of business, is always in short supply, whether for a corporate giant or a small-scale industry. Since bartering generally doesn’t require financial transaction, such a deal becomes mutually advantageous, as neither party has to part with cash to obtain the desired goods or services.

Generates sales and profits: Not only does bartering conserve cash, it can actually generate sales and profits. This is because inventory turns over more quickly and service providers sell more of their time than they would otherwise, had they insisted on cash.

Creates new customers: Bartering brings together unlikely parties, which would never have met in the normal course of business. If satisfied with the deal, these parties can refer many more customers to each other, including the ones who pay cash. Even the original barter customer may start paying cash in future transactions.

Moves surplus stock: Barter moves surplus stock, which otherwise would have remained in the storehouse. It also saves money that would have been lost in advertising and weighty discounts.

Utilizes downtime and unused capacity: If you are not utilizing the full capacity of your plant or service all the year round and can handle new customers, then bartering may pave the way for new business opportunities.

Lowers prices: With bartering the goods and services procured always turn out to be cheaper than they would have been with cash, since there are no overheads. This can give you an edge over competitors.

The most common type of bartering is one-on-one or direct bartering that you can indulge quite successfully. The other type of bartering is called the third party bartering. It uses some form of currency to allow more dynamic exchange between the parties. Businesses generally use both types for best results.
Take advantage of this proven age old process and keep your business alive.

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