Word: bartercard
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...businesses battle to get through the recession, more and more are turning to third-party-exchange networks like Bartercard. According to the International Reciprocal Trade Association, the industry trade body, more than 400,000 businesses transacted $10 billion globally in 2008 - and officials expect trade volume to grow by 15% in 2009. Bartercard, the world's largest exchange network, is leading the charge. So far this year trades through its network are worth more than $2 billion, up by 20% over 2008. Founded in Australia in 1991, when the country was mired in recession, the firm now does business...
Barter, of course, isn't new: firms routinely arrange exchanges on their own. But cultivating those relationships takes time and presents numerous hurdles. "Many direct-barter transactions don't succeed outside of our network because businesses have to match one another in timing and interest," says Wayne Sharpe, Bartercard's founder and chief executive. While a restaurant owner may need $10,000 worth of printing services in the next week, it's unlikely that any printshop owner will need the $10,000 worth of fish and chips that the restaurant can provide in return. "With our service, the transaction...
...Bartercard's bank-like system - which includes monthly statements and an interest-free line of credit - also provides security and accountability that informal bartering can't. Members must pass a credit check and sign a contract pledging to deliver goods in a timely manner. In terms of barter rates, a service that costs $600 is equivalent to 600 trade pounds; members constantly police one another, ensuring that their advertised barter rates match the rates they charge the public. (See 10 ways your job will change...
...time. "There are times of the year when our hotel is full and we know we can generate cash payments," says Stephen Hill, the owner of the 24-bedroom Hotel Penzance in Cornwall, southwest England. "There are other times when we can't - and that's when Bartercard comes into its own." Whenever Hill has unfilled rooms, he places an appeal for barter business on Bartercard's online site or through the firm's brokerages - there are currently 100 offices around the world to help connect members. If the hotel is 70% full, the cost of filling an otherwise empty...
...that trading means more profit for Bartercard. The privately held company charges a one-time membership fee - $1,200 to $2,400, depending on the size of the business - and a 5.5% cash and 1% trade fee on each transaction. Sharpe is confident the firm will continue to expand even as the economy improves. "Companies will need to hire new staff and restart advertising and marketing campaigns which they pulled during the recession," he says. "Bartering frees up cash for that." It's a concept he obviously believes in: the firm uses its trade credits to pay the rent...