Last Updated on November 13, 2022 by Selina Parker
It can be challenging for businesses to survive these days with the monetary crisis. One solution is to switch from cash transactions between customers and merchants to a barter exchange, which allows you to trade goods and services without any monetary medium with a fair market value.
On the other hand, Barter dollars are precisely equivalent to real money at tax time, so they must also be recorded.
This blog post will discuss 19 advantages of switching over from a traditional cash system or the monetary economy to a barter exchange system and why you should consider it if your business still relies on a lot of cash transactions.
- Save money on everyday expenses
- Trade what you want for what you have
- Save money on taxes
- Easy financial tracking
- Avoid late payment fees
- Encourage loyalty among customers and suppliers
- Increase the need for a specific type of product or service
- Create new networks between your business and different ones
- Experience lesser risk
- Build Clientele and reputation
- Easier for business owners with different specialties
- Increase overall profits
- Easy and convenient
- Simplify the accounting process
- Extra incentives to customers who barter
- Increase customer loyalty
- Go green and help the environment
- Create a community atmosphere
- Less wasteful than using cash transactions
19 REASONS WHY YOUR BUSINESS SHOULD SWITCH FROM TO BARTER EXCHANGE SYSTEM
1. SAVE MONEY ON EVERYDAY EXPENSES
Barter exchange involves the trade of goods and services without cash, which allows you to save money on everyday expenses and use it on different aspects of your business.
Everyday expenses you can save money on while when you do barter exchange include:
You could direct exchange your services for an ad in a local newspaper or magazine.
OFFICE SPACE AND EQUIPMENT
If someone needs to rent out their office space, they might be willing to do it if you offer them a premium service or something like gift certificates.
Trade your equipment with someone who needs it and get something you need.
2. TRADE WHAT YOU WANT FOR WHAT YOU HAVE
Without using cash, you can trade items you have for what you need, allowing your business to get rid of old or surplus stock while still being able to get the supplies it requires.
3. SAVE MONEY ON TAXES
Barter exchange is taxable in the year it occurs, but the tax requirements vary based on the type of bartering. A barterer’s income may be subject to income taxes, self-employment taxes, employment taxes, and excise taxes.
4. EASY FINANCIAL TRACKING
Switching to corporate barter exchange instead of cash transactions gives you the ease of financial tracking by using third-party organizations.
You can track every member’s account and the value of barter transactions. Members receive a monthly accounting and a year-end tax report on barter transactions.
5. AVOID LATE PAYMENT FEES
When doing barter exchange for goods or services, you can avoid late payment fees because the barter exchange does not involve cash which means the account will remain in good standing with your client while avoiding any penalties.
6. ENCOURAGE LOYALTY AMONG CUSTOMERS AND SUPPLIERS
Because there is no cash involved in a barter exchange system, your business is more likely to encourage commitment from customers and suppliers. Suppliers will be willing to swap goods or services for your offer which they think are helpful to them or their business.
7. INCREASE THE NEED FOR A SPECIFIC TYPE OF PRODUCT OR SERVICE
Swapping products or services with other businesses instead of selling them increases the need for a particular product or service. It can lead to a long-term relationship with the company you are bartering.
8. CREATE NEW NETWORKS BETWEEN YOUR BUSINESS AND DIFFERENT ONES
The bartering system allows companies that do not usually work together to form beneficial relationships, increasing their overall success.
9. EXPERIENCE LESSER RISK
There is no money or financial investment involved in bartering, which means your business is at less risk of losing money or being scammed when compared to a cash transaction. Check the International Reciprocal Trade Association (I.R.T.A.) for a reliable list of members to make you more confident when doing barter with trading partners.
10. BUILD CLIENTELE AND REPUTATION
If you’re the one providing the service, it is a great way to build a clientele and reputation because you get to showcase your skills while also increasing the need for that particular product or service.
11. EASIER FOR BUSINESS OWNERS WITH DIFFERENT SPECIALTIES
If you are in a business that requires more than one person, it is easier when working through bartering as each employee can take part in trading their goods or services for a different product or service.
12. INCREASE OVERALL PROFITS
If done correctly, bartering can increase the overall earnings of your business because you are not paying out money for products or services but receiving them instead in return for something you already have.
13. EASY AND CONVENIENT
It’s easy to do – find someone who needs what you have and has what you need, then makes a deal with them to come out with something in return.
Many websites like Craigslist make it easy to barter with local businesses and people in your area who want the same products or services that you provide, or even Facebook groups.
14. SIMPLIFY THE ACCOUNTING PROCESS
To simplify accounting processes, only record barter transactions when an item is traded for another, reducing administrative tasks and time spent on record-keeping.
15. EXTRA INCENTIVES TO CUSTOMERS WHO BARTER
Suppose your business offers extra incentives to customers using the bartering system instead of accepting only cash. In that case, more people will be willing to spend their goods and services with you without using currency.
16. INCREASE CUSTOMER LOYALTY
You can create stronger customer loyalty by offering extra incentives to customers who barter with your business.
Because of these benefits and more reasons mentioned in the blog post, it is clear why you should consider trading goods or services for other items instead of using cash if your business relies heavily on transactions between buyers and sellers.
17. GO GREEN AND HELP THE ENVIRONMENT
When bartering products with others, you reduce the resources needed to make a brand-new product while getting the same thing you need. This way, you are helping the environment by recycling items instead of buying new ones.
18. CREATE A COMMUNITY ATMOSPHERE
By bartering products or services with other businesses in your area, you can create a positive community feeling between companies, which helps develop more business relationships and opportunities for everyone involved.
19. LESS WASTEFUL THAN USING CASH TRANSACTIONS
When compared to only accepting cash transactions, bartering helps to reduce the amount of waste created by throwing away products or services you are no longer using.
Barter is an excellent way to do business because it’s less wasteful, convenient, and more accessible to do than cash transactions. It also builds clientele and reputation for your business while increasing your company’s overall profits.
There are many other reasons and benefits to bartering, so it’s clear why you should consider switching your business over too.
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ABOUT THE AUTHOR
“What began as a life and career coaching services company to aide entrepreneurs through the early-stage challenges and tough transformations of starting a social venture has evolved over the years to include mergers and acquisitions, organizational consulting, and business growth advisory services to mission-driven organizations that strive to improve access to basic physiological, safety, and security needs while increasing their profit margin. Clients include founders and organizations with the purpose of addressing deficiencies in delivering quality healthcare and mental health services, sufficient employment, access to clean water and air, safe shelter, adequate food, and more.”