January 20, 2009

Bartering Makes Good Business Sense — Accountant

By Richard Woodbury

DARTMOUTH, NOVA SCOTIA — The practice of bartering may seem like a relic, but it's thriving in Nova Scotia today with multiple bartering organizations in existence.

And with the economic slowdown, bartering may become more of a household word, says the owner of a Dartmouth-based bartering group. "If you think about it, you're conserving your business's cash. So bartering should be something you'd typically lean on," says Chris Guildford of Barter Atlantic Ltd.

The website of the Canadian Barter System, a Canadian barter exchange company, estimates over $16 billion of barter trade is conducted annually in North America by some 300,000 companies.

In business since 1990, Barter Atlantic has 165 members, and last year its members conducted about 8,000 transactions, he says. When members of the group perform transactions, invoices are issued like any other transaction. However, the credits and debits of the accounts are handled by Barter Atlantic. No cash changes hands.

Guildford says bartering decreases cash expenses because by trading for products and services normally paid for with cash, cash flow improves. It also helps grow your business. "It's not just sales," he says, "It's NEW sales."

Craig Green is a partner with Carroll And Green Inc., a Dartmouth-based chartered accounting firm. He says bartering makes good business sense from an accounting standpoint. "The biggest advantage for bartering is cash flow," he says.

Green says in a normal business cycle, firms of people perform a service, send out an invoice, and wait for payment which usually takes from 30 to 45 days. "The benefit of the barter system is that you provide the service, you give an invoice, and you automatically have a credit in the barter system that you can turn and use to pay other expenses and not have to wait for the cash," he says.

Chris Guildford of Barter Atlantic.

Guildford says some of the disadvantages of bartering is that you can't always get everything you want. His goal is to fill in the areas where they don't have members to prevent this happening. Guildford also says bartering isn't good for businesses in financial trouble, because they need cash.

To join the group, there is an annual fee of $200.00 and there is a 10% commission that goes from the seller to Barter Atlantic on sales. "The purpose of you paying me 10% is because I'm bringing you this customer," he says. "You're paying me to be a salesman for your company."

Guildford like to quote one of the firm's original members who used to say, "Where can I get a salesman for ten percent?"