Many business owners have heard about the possibilities of “trade exchange”, but to those not already in the know they can sound bewildering. As with many things, a little bit of understanding can go a long way towards dispelling any doubts, and the simple reality of trade exchange allows traders to quickly and easily swap goods and services.
Why do I keep hearing about trade exchange?
Trade exchanges are undergoing a renaissance, with more and more business owners turning to them as a powerful tool for securing valuable assets. Because a trade exchange does not rely on a business’s capital it allows members to operate outside the cash economy, which can be extremely beneficial for their growth prospects. With the advent of new digital technology to facilitate quick and easy trading, trade exchanges have become more popular than ever
How does a trade exchange work?
Essentially, a trade exchange is a form of barter network which consists of several businesses, usually formed by one central “master” business. These businesses trade with one another using interest-free credit accounts, rather than their actual capital. For instance, a mechanic might “purchase” tools from one supplier in the network; this supplier then uses the credit received from the mechanic to “pay off” other transactions they’re undertaking.
The credit used in a trade exchange functions almost as a private currency acceptable only within the exchange itself. This can be liberating for businesses, as they’re no longer constrained by the cash they have on hand or their ability to secure a loan.
What are the benefits of a trade exchange?
By belonging to a trade exchange businesses can realise the true value of their assets and inventory while also securing useful business from other exchange members. Most importantly, this places no additional financial strain on the business, which can be vital for small traders that operate from one invoice to the next. It’s also a powerful tool for businesses that are growing quickly, and need to plough every last pound into expansion – any assets they can secure through trade rather than capital expenditure means more money to invest in growth.