By Bob Meyer

I’m often asked which is the better way to trade. Going out and doing a direct, 1:1 trade or joining a trade exchange and then trading on an indirect basis, i.e. moving your products or services for trade dollars first, and subsequently using them to acquire the product or service needed.

Once a specific situation is known, the answer to the question can quickly be answered. But generally, and for a variety of reasons, using a currency (trade dollar) for your trading purposes has several advantages. Here are eleven reasons to consider.

• The convenience of finding responsive trading partners through the trade exchange directory that lists members.
• Ease of trading through the use of a common currency, i.e. trade dollars.
• An immense variety of goods and services available through a trade exchange, versus that of trading on a direct basis.
• Obtaining the exact products and services wanted in the desired amount.
• Greater assurance of the trade being completed, since trade dollars can be spent anywhere at any time within the exchange. (In direct trades if the entire trade isn’t transacted immediately, one must rely upon the trading partner delivering at a later date. Which means that you’re dependent upon your trading partner’s honesty and solvency.)
• Promotional costs that bring you added business are handled by the exchange.
• Collection and bad debts costs are eliminated, as all barter sales need an authorization.
• You never extend credit to the buyer (there are no receivables). Any credit extended to members is done through the trade exchange office.
• New cash business can often be obtained through referrals from satisfied trade members, who primarily are the owners or managers of their company.
• Loans (credit lines) acquired through the exchange are normally paid back in trade dollars, and interest on the trade dollar loan is paid with trade dollars, too. (Some trade exchanges extend loans to credit-worthy members, at no interest.) Your only cash costs when borrowing trade dollars is the usual cash service fee when you use their services.
• Regional and national trading opportunities, through the exchange’s intercity trading contacts.

This entry was posted on Sunday, February 18th, 2007 at 8:42 am and is filed under Entrepreneurs & Small Business, Best & Brightest Barter. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.