How to improve your company’s cash flow through business bartering
Unless you’re reading this article from your yacht because your business is so incredibly successful, one of your company’s main concerns is probably cash flow. Top line revenue is great, but as we all know, a company’s health is really based on money in vs. money out. This article will concentrate on how to improve your company’s cash flow through business bartering.
What is business bartering?
Bartering in its most simple form consists of Ann giving something to Barb, and Barb giving something of equal value back to Ann. But what about when Barb doesn’t have what Ann wants? Introduce Carl. Carl gives to Ann what Ann wants, Ann gives to Barb what Barb wants, and Barb gives to Carl what Carl wants. A three way trade has now taken place, and Barb has helped facilitate it between Ann and Carl. Simple, right?
In business bartering, a bartering entity plays the role of Barb, & instead of just Ann and Carl, we can add David, Edith, Fran, Gene, and so on. The entity has what everyone wants – trade dollars with everybody else. Instead of just individuals though, we can trade company services knowing there’s a market available for the trade dollars we now have. The business bartering company makes its money much like a credit card processor by facilitating the transaction.
Ann’s Apples can sell to Carl’s Coconuts, and use those trade dollars to buy Barb’s Bagels. Most importantly, none of these businesses have to dip into their coffers for the most important of all commodities – cash – to fund these transactions. Cash can be used to pay non-bartering entities like landlords, utility companies, and the like.
Whether it’s professional services, repair services, or dinner at excellent restaurants, trade dollars can be used for most anything your company needs. An excellent example of a business bartering company focused on a particular geography is Badger Barter in Wisconsin.
Has your company considered business bartering? What reservations do you have regarding the approach?