By Gary Krupa, CPA
First of three articles
October 25, 2012
Your problem: People aren’t hiring you or purchasing your product, because they don’t have enough money, or they want to save their money. Therefore, you don’t have enough money to buy what you need.
One solution: Barter. If you allow someone to pay you with their service or product that you need, you make it easier for them to afford your service or product. Otherwise, they’ll most likely purchase something they need more, from someone else. And you’ll have to find someone else to provide you with the product or service that you need.
Barter offers these other advantages:
- It makes it easier for you to promote your product or service because it’s part of the barter transaction. Thus, it has marketing advantages.
- It makes it easier to negotiate the price you pay for something.
- The party having less need for barter may charge a higher price.
- Bartering protects both parties to the transaction in the event that the U.S. dollar loses value.
- Bartering offers you access to more vendors and service providers to purchase from, because they’ll have something to offer besides cash.
- It fosters more of a sense of community than cash does. You’ll more likely know and trust the person or organization you do business with.
- Barter helps conserve the environment, because it encourages the recycling of products as opposed to purchasing new products.
Barter makes especially good sense in a weak economy like ours, because it doesn’t require that people pay with cash.
Why don’t more businesses engage in barter, or why do they insist on being paid in cash? There are three main reasons:
One reason is simply that cash, like any medium for exchange, is generally more acceptable as payment for a product or service. This is part of a long-standing tradition. You may consider a barter transaction difficult to arrange or undesirable, because you may not need the service or product that you’ll receive in the exchange. On the other hand, you can spend cash virtually anywhere. Interestingly, cash is generally given less as a gift than a non-cash item is. Thus, because cash is usually given to someone we don’t know, it can be said that cash is an impersonal form of payment.
Another reason is that we’ve been taught, as a culture, to believe that we should accumulate as much cash as possible. This is why we so admire the wealthy in our society. However, it ignores the fact that we don’t need cash to purchase what we need, if we have something else of value to offer. Finally, many people don’t engage in barter transactions because they believe there’s enough of a demand for their product or service that they don’t need to barter. Thus, they consider those wishing to barter as offering products or services that are less desirable than those offered for cash are. Such reasoning is without merit, simply because money isn’t circulating as easily nowadays, as stated at the beginning of this article.
Barter is for people who can think outside the box. It takes imagination to arrange a barter transaction for the benefit of all involved. It also takes initiative. Many people don’t want to make the effort, since transacting in cash is easier. Yet you’ll have more customers when you accept barter, and you’ll expand your purchasing power when you pay with barter.
Here are just a few ways you can receive the benefits of barter:
- Only barter with someone whose product or service you need.
- If the person you wish to barter with doesn’t need your product or service, don’t give up on doing business with them. Ask them what product or service they need, and then look for someone who offers that product or service. You might then trade with that person, and then have what the first person needs.
- Either join or start a barter club. Ask your friends and neighbors if they have something with which they’d like to barter. Then recommend them to others of your acquaintance who may need their product or service.
Next: My firm’s experiences with barter
Gary Krupa is a CPA in Arizona, with more than twenty-five years experience providing accounting, tax, audit and computer services to organizations of all sizes. He’s especially attentive to the needs of his clients. He moved to Rimrock, Arizona in late May 2008. He has offices in Rimrock and Peoria, AZ. His e-mail address is gkcpa@q.com. His website URL is http://garykrupacpa.com.
His firm accepts and offers barter as a form of payment, as well as cash, and can facilitate barter transactions.
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