Posts Tagged ‘Trade Dollars’
Turn Trade Dollars into Cash

Virtually every trade exchange member regularly pays cash for something that could be bought on trade, which can then be resold for cash. If you can’t find it yourself, your trade broker should be happy to assist you.

For example, one of our clients is a magazine. One of its major expenses is color separations. We found another business that does separations and signed them up specifically for the magazine client.

The pre-press company does the separations and film on trade, and the magazine charges cash to its advertisers. With the help of a creative broker, the magazine now turns its Trade Dollars directly into cash.

The separations were an established part of the magazine’s fixed cost, so it was fairly simple to recognize the barter opportunity. Creative traders can also develop new product lines or new ways of doing business that turn Trade Dollars into cash dollars.

For example, a parking garage teamed up with an oil change and auto detailing company. Parking customers find it convenient to drop their cars off and not waste time on minor maintenance. The parking garage pays for the work in trade, then charges cash to its customers.

With the help of creative trading, the garage owner found a way to offer a new service and generate a new source of cash flow funded completely on barter.

There are numerous examples of how businesses can turn trade dollars earned from new sales to new customers into cash sales to customers that aren’t members of the barter exchange. A lawn maintenance company can use trade dollars to purchase plant material and sod on trade. An auto repair company can use trade dollars to buy auto parts on trade that can be sold for cash.

With just a little creative thinking, the possibilities of using barter to expand a business and improve the bottom line are endless.

Earn Cash While Selling on Trade

Many businesses can also generate cash as a by-product of earning Trade Dollars. Hotels and resorts are a good example of this process.

The mortgage, insurance and utilities on a hotel are fixed, whether the hotel is fully occupied or nearly empty. The incremental cost of filling an unused room is minimal. To pay for the extra house cleaning, laundry, and complimentary items such as soaps and shampoos, it costs about $20 per room night.

But just think about how much cash revenue that twenty dollars can generate. The people staying in that room order room service, buy sodas from the machine, magazines and gifts from the gift shop and eat in the restaurant. It’s even more lucrative if it is a resort. When a destination resort offers sports, tours and entertainment, visitors spend a lot of money on peripherals.

The hotel has generated cash it would not have had while producing full value for the room in Trade Dollars. In addition to the new cash flow, the hotel can use the Trade Dollars it earned from selling excess unsold inventory to offset cash expenses.

There are many other types of companies that can also generate new cash sales from participating in a barter exchange. These include, auto repair facilities that also sell vehicles, computer repair companies that sell computers and HVAC service companies that sell equipment. The companies can offer their repair and maintenance services on trade and also market vehicles, computers and equipment to these new customers to generate new cash sales.

Barter Exchange Q&A: Credit Members for Set-up Fee?

Q: There is an exchange that is signing members up by giving them a trade dollar credit in the exchange equal to the new account set-up fee they choose to start with.

This seems to be a great idea.

The question is… If I post a sale to a member for the purposes of depositing credits into their account (therefore triggering the appropriate 1099 activity for the member),  I am getting those credits from my operating account’s credit line. Are the credits I use from my credit line considered income to my exchange once I sell them to someone else?


A: Posting trade dollars from your operating account to a members account would be an expense to your exchange. You are basically spending trade dollars that just haven’t been earned yet. In this particular case, it appears to be a Marketing or Sales Expense, which should offset future trade dollar revenues, but speak to your accountant to be sure. 

While this sounds like a great idea, in my opinion, doing this can have significant long term repercussions:

The exchange is spending trade dollars that it has not earned, thus creating a deficit in the exchange’s economy. Exchanges should ultimately maintain a zero deficit system to remain healthy and prosper.

You will end up with all of your members having a positive trade balance, with no negative offsets, so members will have little incentive to sell and get trade, as they already have trade dollars in their account.

If members accumulate too much trade and initially don’t find things to spend it on quickly, they may go on hold and stop selling.

It eliminates the urgent need for members to make immediate sales so that they can purchase new trade opportunities when they become available.