Barter as per definition, is the exchange of goods and services between parties without the use of cash. As per English thesaurus, it as swap or exchange only.
Barter, being the earliest form of business transaction bases itself around the fundamental solutions it provides businesses, that of helping optimize cash, effectively liquidate excess inventory stocks & efficiently utilizing excess capacities.
The conventional businesses work on selling their products and services on cash, running around the market to get the payments and then spending the money to buy whatever they require. Barter eliminates the effort of collecting payments and spending the same. Just use your products as currency to buy whatever you require, in good times and bad.
In every business, production planning goes haywire due to change in market scenario thereby creating excess inventory, slow moving, or over-produced. When things move slower than you expected or you need more resources to grow, you need to use the liquidity of cash resources. This is where barter gives you the opportunity to turn the stocks into value and purchasing power by trading, when you need it the most.
Traditional barter, effective but limiting.
One to one barter trade induces compulsions – You would like to liquidate your inventories but you do not want the products/services offered by the person/party interested in your product! Would you barter?.
Limitations of valuation – when you know the product cost, who won’t like to know the production cost of that product that you would receive in barter?
Corporate Barter Network's – One stop shop.
Corporate barter networks facilitate companies to engage in multi party barter transactions eliminating the one to one limitations. In an organized trade exchange facility, the mode is like that of a bank, companies bank values with the trade network by selling to any company in the exchange network and against the value sold or buy what they require from any company within the network.
Much like shopping in a supermarket, usually they find most requirements available in a corporate barter network, be it media, products, services, etc. Although this industry is in its infancy in India, many products and services can be obtained in the barter markets.
Corporate barter works where there is fairness in transactions and where every client in the network believes in a win-win deal, for himself and the others.
