What are the benefits of barter over cash?
There are numerous benefits to using barter as an alternative to cash. These differ for individuals and businesses.
Businesses
-
Barter allows companies to both lower costs and increase sales - when your company barters its product, it is costing the company at the wholesale price of the product while the value of what you get in return is closer to the retail price.
-
It frees up the lifeblood of any business - cash reserves. Not everything can be paid for through barter, but by bartering the things that can, you leave cash untouched to pay for the things that can't.
-
How do companies handle excess and out of date stock? They have to either throw it our or sell it at a massive discount. A company could instead trade their excess stock for a service they need done. For example a computer retailer trades a high end - but out of date - computer for some painting work. They have solved their excess stock problem and got some work done as well.
-
Opening your company to barter arrangements and rejecting the notion of 'cash only' can work to lower the risk of debtors defaulting. By accepting payment in kind both parties are better off.
-
The Wall Street Journal states that 80% of Fortune 500 companies engage in barter activities.
Individuals
-
As with companies, cash is vital for individuals. Barter arrangements help to free up this cash for things that can't be bartered.
-
By bartering your skills and services, all it costs you is your free time.
-
Barter allows you to cash in on your skills and training without any long term commitments. For example, an accountant offering to do tax returns for a restaurant in exchange for a free meals, this doesn't require the accountant to set up their own company or find employment to convert their skills into a consumable product.
-
Find yourself temporarily unemployed? You can use your extra time productively. Bartering your services allows you to keep your skills sharp while you find new employment.
-
People often have things lying around the house that they no longer have a use for, and sometimes it isn't worth our while to find a place to sell these items. You might not realise what is rubbish to you might be worth something to somebody else. Post your 'thing' in the forums and see what offers come in, you never know...you might find something interesting!