Q&A talks about growing business via barter with Debbie Lombardi, president, Barter Business Unlimited, Bristol.
Q: How big is the barter market in Connecticut? Is it popular with larger or smaller businesses?
A: The barter market is “fluid” throughout Connecticut. Thousands of companies from one employee to Fortune 500-sized companies are actively trading in our barter network. While each company’s monthly trading amount might differ greatly, we are finding that business owners and senior executives welcome the opportunity to save needed cash and turn unused goods and services into credit for needed purchases. Due to the present economic climate in our region, Barter Business Unlimited has experienced some positive growth during the past 18 months. Overall, the International Reciprocal Trade Association estimates that more than 470,000 companies in the United States actively participate in barter, producing more than $12 billion in annual sales. According to the association, more than 65 percent of the corporations listed on the New York Stock Exchange are presently using barter to reduce surplus inventory, bolster sales and ensure that production facilities run at near capacity.
Q: What are some misconceptions people have about using barter?
A: While most business professionals understand the nature of our barter network, we always find there are questions about how barter can most effectively be used as a smart business tool. One of the top misconceptions is that you must trade directly with another business. Barter Business Unlimited acts as a “barter commerce coordinator” and keeps track of barter network purchases and sales so barter credits can be used to purchase goods or services with any member.
A second misconception is that actual cash sales are turned into trade. Barter generates news customers and new sales allowing the business to expand its market presence while maintaining its cash customer base. Certain rules are applied to allow each business to grow within the barter network.
A third misconception is about extra fees and costs. Simply put — if you had to purchase a color copier for $1,000 how would you rather pay? With a check or pay an equal amount through trade via the barter network? Most smart business executives would prefer to trade and conserve cash.
Q: Are there tax liabilities associated with using barter? Do businesses have to treat barter as revenue?
A: There are no tax advantages or disadvantages by using barter. It’s best to view barter as a mode of payment — just as you would with cash or a credit card. Our barter exchange company acts as a third party record keeper and issues a 1099B at the end of each year. Each month statements are issued showing sales and purchases. The 1099B, along with the monthly statements, make it easy for accountants and bookkeepers to facilitate and reconcile the sales and purchase barter portion of your business.
Q: Isn’t there a risk with barter that a business will be popular (say a restaurant) but then unable to find anything to spend its barter money on?
A: Each barter member “controls the faucet” on how much it chooses to trade. Certain trade rules can be put in place that can restrict trading dollars each month, types of services or products offered or, in the case of a restaurant, even the day of the week barter purchases can be applied. Our barter brokers help members to arrange the most effective method to make purchases or sales. Through our barter network — which includes reciprocal relationships with barter organizations nationwide — we can find most requested items and services for our members from the restaurant owner that needs janitorial cleaning, printing and painting services to general contractor that wants to give gift baskets to his clients, flowers to his wife and needs a new muffler for his pick-up truck.
Q: At your Barter Expo event on Nov. 9, you plan to release information about a healthcare benefits program that will be available strictly through barter. Is this a health insurance program or more of extra coverage program along the lines of catastrophic care?
A: Our new BarterCare program is not a healthcare insurance program and has nothing to do with buying or selling health insurance. The new BarterCare program is a single-source platform that will to allow our barter customers access to healthcare services and products through our membership network. The upcoming launch in January 2011 of the BarterCare program will allow our customers to make better and more informed choices. The platform will also allow our customers to integrate BarterCare into their current healthcare program.
Q: Is this the first time in Connecticut that businesses will be able to get health care coverage through barter?
A: No. While we have offered a wide variety of healthcare services and products through the barter network, this is the first time we have offered a single-source platform to make it easier for our customers to make better health care choices.
