When businesses need to make the most of their cashflow, it’s important that they’re able to use every tool at their disposal. Turning to a business barter exchange can be a very practical way for businesses to alleviate the monthly strain imposed on cashflow, and when it’s employed well this technique is an excellent method to enhance profitability. However, it remains that relatively few business owners understand the potential power of these marketplaces and are therefore slow to utilise them to their fullest extent.
How does a Business Barter Exchange work?
Much like an ancient marketplace, a business barter exchange provides a forum in which companies can exchange goods and services without the need for cash to change hands. Unlike these old-fashioned markets however, a business barter exchange is often entirely virtual. Members are able to contact and negotiate online with other users all around the country to connect and establish vital trading links, which can prove essential for ongoing success.
Some business barter exchanges enable their members to take advantage of their own unique “micro-currency”, a type of asset that can be earned by trading goods or services with other users. This means that a successful trade can be established even if the two trading partners aren’t physically swapping goods or services – one partner can be rewarded with the exchange network’s own currency, which can then be used to obtain other services from other members. Because of this, it’s often easier to trade successfully within a barter exchange network than it is to locate the right partner individually.
Accounting with a Business Barter Exchange
As with all contra trading and barter exchanges, it’s important that both parties maintain accurate records of any deals they have taken part in. HMRC views any form of bartering as taxable, so it’s essential that each exchange is recorded in detail and added to the company’s accounts books.
Most barters are between goods of equal value, which makes the exchange tax-neutral – the business incurs an equal profit and loss, and is therefore not liable for any additional tax expenses. However, it’s of paramount importance that both partners retain proof in their records that the deal has been concluded in this way, to avoid any tax complications in the future.