Surviving In Today's Economy Using Trade And Barter (Part 1)

By Traderal   This email address is being protected from spambots. You need JavaScript enabled to view it.

Let's start by explaining the difference between trade and barter.

Barter can be trade or trading; however the word trade can mean barter, cash, checks, credit cards or other forms of currency.  If we look up the word barter; "To exchange goods or services against something else without the use of money".  I'm sure you knew that.   So how is money defined?   "Anything that serves as a medium of exchange for goods or services".  So anytime you use a medium of exchange you are not bartering; got it?


Bartering can be a great way of doing business; however it does have its limitations.   In the true sense, bartering is better than cash; this is only when each party has what each other wants; which is rarely the case.  That is why we will introduce to you how to properly use a Trade Exchange.   Proper use of a Trade Exchange will help you use bartering to its fullest.


A Trade Exchange is an organization that can consist of several hundred local businesses, such as I.C.R.E. (The International Credit Reserve Exchange, Ltd.).   I.C.R.E. is also referred to as a "Referral Service or a Business Cooperative".   Trade Exchanges are often called Barter Exchanges.   This is where the confusion comes in; most exchanges do not barter.   The way an exchange works is more similar to the way a credit card company works.   The members of a Trade Exchange are all given a trade account, like a bank account.  When a member wishes to do business with another member it is not necessary for them to need what each other has; as in the case with barter.


I.C.R.E. allows the selling member to collect any variable cash, such as cost of goods sold, sales tax, or incremental labor in cash.  The difference in the "fair market selling price" is taken in Credit Dollars (a currency or medium of exchange).  The seller can use the Credit Dollars like cash, dollar for dollar, with any of the members of the Trade Exchange.  In many cases these Credit Dollars can also be spent with nonmember businesses.


The benefit to the buyers is they are able to conserve cash needed to make purchases and pay back the borrowed Credit Dollars with the markup of  their surplus time or products, usually at a later time and usually with business profit they wouldn't have received, had they not been a member of the exchange.   The benefit to the seller is they receive business they would not normally get, they collect any variable cash cost (so trading doesn't hurt their cash flow), they expand their customer base (at no extra cost), and any of the Credit Dollars they spend free up cash that would have been used to make the purchase.


I.C.R.E. improves your barter ability, any time you need to barter to help close a sale and you don't need the barter, you can sell your surplus barter to a Trade Exchange Member for some cash and Credit Dollars rather than lose a sale or be forced to discount your profits!  There are many other benefits to being a member of a quality Trade Exchange.  Stay tuned!

Surviving In Today's Economy Using Trade And Barter.   (Part 2)

By Traderal   This email address is being protected from spambots. You need JavaScript enabled to view it.

Is it legal to barter? The IRS says YES!  When the "fair market value" of a barter is included in your gross income for the year, it is taxed the same as cash.  Also, you are allowed to deduct barter expenses, the same as other business expenses.  Keep good records, because barter is treated like cash.  You are better off bargaining/bartering and paying applicable taxes, than not, just to avoid taxes.


Is trading through a trade exchange legal? Again, the answer is YES!  In 1984 the TEFRA Act was changed to include Trade Exchanges, such as ICRE.  Trade Exchanges are considered a third party record-keeper, on par with banks and credit card companies.  ICRE reports the gross credits earned by members using a lO99b form, just as banks are required to report the interest on your savings using a 1099 form.  Trading and bartering increase your productivity greatly.  Taxes are a small price to pay for the expanded benefits.


Effective use of trading and bartering can give you an additional 20% of your gross, net!  How is this possible?  Most companies across America are not achieving their maximum productivity.  A lot of companies are only at 60-70% productive.  When this is the case, these companies can increase their productivity "through proper use of trading and bartering" as much as 20% without having to increase their fixed costs, such as rent, salaries, utilities, etc.  This means that as long as these companies collect their variable cost attributed to this new business in cash, and barter or trade their profit, that barter or trade becomes"net barter or trade in reserve"!  Anytime companies exchange this net barter or trade dollars on any fix or variable expense, the cash saved (or not spent) goes to the bottom line in the form of "net cash retention".  There are companies that would gladly do business with you under these circumstances that are currently dealing with your competitor.2


How do I know that when I engage in trading or bartering, I won't get "ripped off"? All you can do is be careful and use the same discretion you would use if you were doing a cash transaction.  Check the references of people that you don't know.  Also, look at the quality of their previous work.  One of the many benefits of being a member of a Trade Exchange is, in most cases, the Exchange has had experience with most of its' members.  You may also want to check prices outside of the Exchange, prior to using the Exchange.  With an outside estimate, you can usually "lay your cards on the table" with fellow members of lCRE.  They generally match or beat a competitive price and accept your Credit Dollars for part or full payment.

How do I barter or trade for gasoline? In order to barter for gasoline, you must have something to use as barter.  Take inventory of your tradable assets or services, including miscellaneous items and put your cash asking price on the list, too.  This list could also include goods, services and assets of people that owe you money and are slow paying.  Make copies and keep this list with you.  When you find a gasoline retailer, show or leave them your list. You could have a CD player available on the list, for example.  The gas retailer may want the CD player and still keep his cash, but we both know that they can give you a line of credit to buy gas.


What happens if I do not have any barter or the gas retailer doesn't "want anything on my list? That's were trading comes in. You can affiliate yourself with a Trade Exchange like ICRE.  Once you do this, everything in the exchange is at your disposal.  For example, ICRE has over 20 restaurants.  You can sell items on your list for Credit Dollars easily.  You can use Credit Dollars to purchase anything on the Exchange, and this really expands your options!  Presently, the Exchange has over 1,200 products and services available. 

But, what if I don't have anything to trade or barter; I still need the gas! ICRE can still help, since most ICRE members have no cash tied up in acquiring their credits and they may have some surplus Credit Dollars.  They are willing to sell their credits for cash.  The current purchase rate is 50 cents on the dollar, so you could purchase items from an Exchange Member, trade it for the gas, and your cash cost could be reduce by as much 50%.  Stay tuned!