Frequently Asked Questions
Q: Is barter the right solution for my company?
A: It is in the interest of our own business to tell you that barter is right for your company but the fact is that it is only right under certain circumstances. Ask yourself some questions.
- Do we have excess inventory?
- Or stalled, old, in-the-way, obsolete inventory that we want to move?
- Are we sitting with unsold products or services that are not currently contributing to our bottom line?
- Do we want to increase business, gain new customers, develop new business and distribution channels?
Most companies say “yes” in several of these categories and it is pretty easy to answer, “Sure – Absolutely we want all that.”
Here is the hard question: If our company decides it wants to reduce coats and increase sales through the use of barter, are we willing to be committed to using barter as a form of payment for part of our operational purchases?
If your answer is “no,” then a barter option may not be in your best interest.
If you are committed, if your answer is, “Yes, we do want those opportunities for our company,” then your job becomes easy because Superbiz does the work. We listen attentively in order to understand your company’s objectives; we clearly articulate each and every opportunity in order to support your goals, and we do the groundwork to ensure your repeated success.
Are you a “yes?” or a “no?” That is the real question to ask.
Q: Why does barter sometimes have a negative connotation?
A: We love this question and it probably represents the one question that business people either try to be especially polite about, or that they blast off about – and for good reason.
There are several answers to this question. Probably the most common reason is that some companies tend to over-promise and under deliver. Superbiz does the exact opposite, we under-promise and over-deliver.
In addition, “unmanaged expectations” can be damaging to companies. It is the responsibility of your exchange’s Trade Director to help clients gain a thorough understanding of what can truly be accomplished with barter and what those accomplishments will require.
There is no “secret handshake” in barter but there guidelines and rules that apply to the industry. It is important to work with a Trade Director who takes the time to explain the nuances and answer any and all questions. Protecting your interests and offering you complete transparency will remain key to a successful transaction.
Q: What should we consider before signing a contract with a barter exchange?
A: Make sure you can spend, or “retire” your trade credits. Retiring your trade credits is the financial facet of the equation that allows you to realize the revenue.
One good way to accomplish this step is to make sure you have your spending strategy in place and then ask your barter company, broker or consultant, to sign off on that strategy. If they are not willing to do so, you may be gaining valuable information regarding future service and level of commitment in that hesitation.
If you take these few simple steps first, your transactions will enjoy a high probability of success.
Q: Should we work with a barter exchange?
A: Even very large corporations that have a full, in-house, barter division often use barter exchanges or consultants as well as their in-house function, simply because it is to their advantage.
Navigating the industry without guidance can be intimidating or less successful than doing so with a partner who is motivated to represent your best interests. Since consulting to companies regarding their barter portfolios is “our” business, we have worked hard to provide an unbiased view for companies that are taking a serious look at incorporating barter into their business strategy.
The advantage to a barter company or consultant is that your company’s options are immediately expanded to include new customers, new products, new services and new distribution channels. For instance, companies that employ barter as a critical sales avenue realize that cash-paying customers represent one business stream. But the real advantage of barter comes to life as the new distribution channels begin to deliver new customers.
Turning excess capacity, unsold and sluggish inventory into revenue activates stalled areas of business and generates new revenue streams that carry to the bottom line.
Q: How do I handle the accounting for my company’s corporate barter transactions?
A: We refer companies to their respective financial departments and do not offer financial or tax advice. There are clear tax and accounting codes that provide answers to accounting questions and we encourage all companies to consult their financial resources to ensure accuracy.
Q: Are there any tax advantages to bartering?
A: There are neither tax advantages nor disadvantages to bartering. Trading is simply a method of payment and represents an additional means of generating revenue that would otherwise be unrealized in most cases. Barter income is treated the same as cash income.
A sales, business development, customer acquisition and marketing tool, trade is not employed as a tax tool. Your company is provided with a 1099B at the end of the year representing sales for the year. Cash purchases that are normally tax deductible as business expenses are also tax deductible when purchased on trade.
Q: What companies are involved in barter?
A: Any company who has experienced the benefits of barter is likely to incorporate barter into its purchasing, business development and excess inventory management strategy. While there are varied estimates, it is widely known that most Fortune 500 companies recognize barter as an essential element of fiscal responsibility. Some estimate that the global barter industry has reached $65 billion annually while others cite the industry as a $10 or $20 billion influence. Over 500,000 businesses use barter to their competitive advantage. It is estimated that a minimum of 65% of Fortune 500 companies engage in barter.
Q: How should I price my products and services?
A: That depends on who you choose to work with. Some barter networks are based on MSRP while other trade at closer to street pricing. It’s critical to the success of your transaction to understand the “real value” of an exchanges’ trade currency.
The government looks at a trade dollar as equal to a cash dollar but it is important to ask yourself if the reality of the value you are receiving equates.
You need to make sure your company is on a level playing field and you accomplish this by knowing you are working with an experienced barter consultant who watches out for you. That is their job – it is their responsibility to make sure in that regard that you continue to come out whole.
The best way to explain this may be to simplify barter in the following way:
Do not treat barter any differently than you would any cash transaction. Barter is simply a method of payment and all parties involved can and should still hold each other accountable, just as with any cash transaction.
Check references; check reputations; check the company, just as you do for any other transaction. Your business decisions should not be altered in any way because of barter.
Q: How do I incorporate barter into my budget and marketing plan?
A: Some companies allow their marketing department to manage their barter transactions while some involve the CEO or CFO. When companies experience the full impact of barter, they often, very enthusiastically, initiate the process of examining budget and line item expenses that could be offset by trading instead of spending cash. Barter offers pragmatic and strategic opportunities to improve the budget; build the client base and distribution channels, increase sales, conserve cash spending and competitively position the success of the company’s future. Barter New York