Commercial Barter FAQs:

Is a commercial barter trade credit the same as cash?

Yes...and no. 'Yes' because the trade exchange that is issuing the credit
to you when you sell within its network is giving you a form of
currency called a trade credit. In the U.S. each trade credit is equal to
one U.S. dollar. You should be able to spend your trade credit just like
it was cash, but also get all the additional benefits of being a part of
the barter exchange network.
'No' because a trade credit is not insured by any government like a
national currency is. Rather it is backed by the strength of the exchange
that issues it.
Therefore, make sure the exchange that you belong to has a reputable
history of operation and is regarded well within the community it
serves.

How can you get what you need for your business through your
membership in a barter company?

Create a checklist of your business needs. Think about ongoing
purchases such as printing, travel, office expenses, professional fees,
auto repair as well as one-time purchases such as brochures,
advertising, equipment, remodeling, etc. Then discuss with the barter
company the extent to which these products and services are available.
In addition, brokers at the exchange should review the items that are
generally available that could benefit your company. It is also important
to note that more and more exchanges are members of global trade
exchange networks (trade exchange for trade exchanges) that provide
access to a global marketplace of goods and services. You should ask
the exchange you belong to if they are members of such networks and
how you can participate as their member.

Is it acceptable to ask the barter company about their satisfied
clients?

Absolutely. Ask for a list of their long-term clients and ask the clients
how they are utilizing the barter company. Inquire about how many of
the clients are actively trading. Experienced barterers can give good tips
on how to use barter dollars effectively.

What does it mean if a barter company's client is currently not
trading?

There may be several reasons why a company may not be accepting
trade at any given time. It may be because the time of your contact is
a peak time for the company's cash business and they simply can't
handle additional sales. Or, it may mean that they have a trade balance
that they have not had the time to spend and do not wish to accumulate
more trade dollars until they've spent what they have.

Are trade prices and cash prices always the same?

No, they are not. Just as in the cash world, significant differences in
pricing may exist among companies. Make sure you are comparing
apples to apples when you are comparing prices. For example, while
two printers may offer the same service, one may have specialized
equipment that makes the process more efficient and thereby affords
the printer a pricing advantage.
On the other hand, the other printer may have to sub-contract certain
jobs, resulting in a higher price for that particular service. In general,
barter companies expect their clients to price their goods or services
for barter customers the same as they do for cash customers.

Does the trade exchange provide statements of my account activity?

Yes. IRTA recommends that you make sure you will receive monthly
statements from the exchange you belong to. Just like your bank or
credit card statements, you should review your trade account statement
to make sure all transactions were approved by you. This is important
since some exchanges have a period after which transactions cannot
be disputed.

Am I better off trading with a company in my geographic area?

A company in your geographic territory may have an advantage in
offering products and services that require geographic proximity such
as restaurants, auto repair, dry cleaners, or limousine services. In
addition, technology and reciprocal trade relationships between barter
exchanges have enabled local or regional barter companies to make it
possible for their clients to sell and buy outside their immediate
markets. However, larger barter companies have other benefits such
as worldwide clients, more availabilities of products and services,
and larger clients. Interviewing and asking questions can help you
determine which company can best serve your needs.

If I'm new to barter, how can I learn to use barter as a business tool?
And how do I know who the other members are?

Ask the barter company that you are considering joining how they will
help you learn to use barter most effectively. Many barter companies
have customer service, trade brokers and/or trade consultants to help
you and some offer educational opportunities to network and learn the
basics of barter. Also, a reputable trade exchange will provide a
member directory with periodic updates. More and more exchanges
have on-line directories and trading platforms that will contain
information on members and the goods and/or services they are
offering.

Are the client agreements, broker fees, monthly service fees,
membership fees, etc. different for every barter company?

Yes. Barter companies have differences in how their fees are charged.
The barter exchange can become a sales/marketing representative for
you while also helping you secure products/services you need to run
your business.
The fees they charge to do this may vary. IRTA recommends that you
consult with your accountant after learning about the fees to make an
informed decision regarding the use of barter and the amount you should
barter within your overall business.

What are the tax ramifications of barter?

In the U.S., commercial barter exchanges annually report their clients'
sales to the IRS on form 1099B. IRTA cautions you not to do business
with someone who tries to sell barter as a tax dodge.

How can I check on a barter company I am thinking of doing
business with?

Make the usual business reference checks with organizations like The
Better Business Bureau and your area Chamber of Commerce. You can
also check with IRTA and see if the company is a member.
IRTA members subscribe to a Code of Ethics. If you believe that an
IRTA member has not followed the Code of Ethics in their business
conduct, please contact IRTA directly.