Barter helps small firms save money, build relationships

By John Eckberg
Cincinnati Enquirer

Bartering, perhaps the world's oldest form of commerce, has new appeal for a growing number of large and small companies.

The business-to-business swap, which usually occurs through an association such as International Monetary Systems, headquartered in suburban Milwaukee, has gained in popularity because it can conserve cash, particularly during lean times.

It also brings new customers to a business's front doors, a sales opportunity that many companies build upon.

"We are growing at a 10 percent to 15 percent rate in gross revenue volume," said Dale Mardak, vice president at Continental Trade Exchange, a division of International Monetary Systems, which has a regional base in Columbus, Ohio.

"That's the way it is when you compare any month in 2003 with the same month in 2002. We are a panacea in bad times."

Part of its appeal these days is that bartering allows goods that would otherwise have to be bought with hard-earned cash to instead be acquired at a wholesale price or the value of a product when measured in overhead costs.

"We've used International Monetary Systems for about 22 years," said Bob Roncker, co-owner of Bob Roncker's Running Spot, a Cincinnati shoe and athletic apparel store. "I find that it works quite well as long as there's opportunity to be able to spend (the credits)."

Roncker said gift certificates for employees, staff celebrations and flowers are among some of the services and products that he has acquired through barter.

One of the nation's largest corporate and consumer barter services, the Continental Trade Exchange, which transacted more than $3 million in November, charges members a $595 initiation fee, $10 per month as a maintenance fee and a cash transaction fee of 12 percent of the trade dollars.

John Volz, vice president of marketing for FirstBarter.com, based in Turnersville, N.J., has a division, Ohio Barter, that is growing as companies seek ways to save cash.

"Barter is a secondary economy that can boost the bottom line for companies, particularly during harder times," he said. "We basically are a bank. We have the platform, people can use the barter dollars anywhere in the system with any member."

Here's how it usually works:

Products or services are offered to association clients for trade credits, which are then posted to the firm's account. Values are set at everyday selling prices or fair market prices.

The trade credits can then be used to purchase products or services by other members of the exchange.

For hotels or airline seats, which might have otherwise been vacant, for instance, the company has a chance to recoup value, which would otherwise have been lost.

Mardak said many firms find an incremental increase in business as a result of a barter arrangement.

"And once there is a relationship, perhaps the relationship will continue but later it's on a cash basis," Mardak said. "Bartering can open the door to new business."