Why Barter?

Why Barter?

Questions and Answers

What are the advantages of Barter?
Barter produces new business and allows you to expand your market. Secondly, these trades conserve cash. Why Barter? Because, instead of spending cash to purchase needed goods and services, you can trade your own goods and services. Therefore, cash stays in your business for other purposes. Finally, trade lets you put idle resources to work. Excess time, excess inventory and excess capacity are converted into needed goods or services.

How does Simplicity Barter work?
Members of the Simplicity Barter Group use trade credits instead of cash to do business together. If a member trades one thousand dollars of goods and services to another trade member, that member will receive one thousand dollars in trade credit, which can then be used to purchase a variety of goods and services from other members of the Simplicity Barter Group. Hotel rooms, resorts, restaurants, advertising, printing and many other goods and services can be obtained with trade credits. Simplicity Barter is a third party record keeper that sends monthly statements to each member reflecting their purchases, sales and current balance.

What other companies are involved in barter?
Nationally, there are over 300,000 businesses, most of them small, currently involved in commercial barter. Based on present trends, 1.2 million businesses will be engaged in barter in North America within a decade. It is estimated that 75% of the Fortune 500 Companies engage in barter in some form or another.

Why is the Simplicity Barter unique?
The Simplicity Barter Company represents over 20 years of combined experience serving clients. Our knowledgeable staff makes us the organization with which to trust your trade management, trade brokering and trade accounting needs now and throughout the coming years.

What does it cost to join Simplicity Barter Group?
There is a one-time setup fee which is credited to your barter account immediately with a guarantee that if within 60 days we do not bring you the equivalent in new business it will be refunded. There are no monthly fees or annual renewal dues.

How does Simplicity Barter Profit?
Simplicity Barter collects a small fee on each transaction, typically from both the buyer and the seller upon the completion of a successful transaction. These fees are necessary to maintain the operating costs of the Group.

Why a commission?
The fee represents a broker commission. Remember — trade business is new business. Many businesses are happy to pay a commission for new business.

I already trade on my own; why should I join Simplicity Barter?
The problem with one-to-one trading is each business must want or need what the other business has to offer in equal dollar amounts. Fortunately, at Simplicity Barter, your value is converted to a barter dollar amount so everyone can trade with any other trading member of the Group.

What if I cannot spend my trade dollars on the things I need the most?
When Simplicity Barter does not have the goods or services a member needs, it becomes our job to find them. New businesses are sought to join the Group on the basis of their ability to provide goods and services needed by the current membership.

How can I spend my trade?
Make a list of your needs. List everything you normally spend cash on. Do not limit yourself to one or two time item purchases. Use your checkbook as a memory tool. Also, think of your personal needs. If you regularly take cash out of the business for personal living expenses, travel or home improvements — you should consider using the trade income you have accumulated, and save your cash for goods and services the barter network cannot easily acquire.

What if I earn more trade credit than I spend?
Members should only trade in proportion to their ability to spend. If one member sells goods or services in high demand, it may become necessary for them to limit their trade activity. Our experienced management team monitors all trade transactions, thus ensuring a balance of credit and debit.

How will other members find out about me?
One of our jobs is to promote your business to other members. Simplicity Barter can help promote your goods or services to other members via our directory, mailing lists, website access and direct contact. You also get a “barter store” in our software to promote any product or service you wish to ALL members.

Is it true getting something for trade can take more time than getting it for cash?
Yes. Sometimes a business must show priority to its cash customers because of cash flow necessities. However, advance planning and communication with your trade broker for alternatives will make trading an effective and profitable experience.

What if I need goods or services and I do not have enough credit to purchase it?
Trade credit lines can be set up for members just as a bank extends credit to its qualified customers. When joining Simplicity Barter Group, you will be reviewed by our experienced team and assessed a credit line. Over time, your credit line may increase depending on your timely payment and need for extra credit.

What other ways are there to use barter?
Many members use trade credit to pay employee bonuses. Some members pay their employees a portion of their salaries in trade credit. At your request, we will set up employee sub-accounts and will assist your employees in using their trade credits as advantageously as possible. Employees need not pay a 10% brokerage fee. This fee can be prepaid when a member transfers credit to a sub-account.

It is also possible to pay some of your bills with trade credit. We can help your creditors spend their trade dollars effectively. Paying bills with trade credit is just one more creative way to use your trade credit?
• Simplicity Barter can even use trade credit to collect past due accounts. Often, a business that owes you is willing to pay on their account with goods or services. If their goods or services are acceptable to Simplicity Barter, we will purchase them in the amount equal to your account. We will credit your Barter account for the amount of your Debtor’s delivery. You can then use that credit to obtain goods and services.

What if I quit the Exchange? What happens to my trade credits?
Any member who quits the Exchange is given three months to spend their trade dollars. Extensions are usually granted for members with large balances.

Are there tax advantages to trading?
Trade income is the same as cash income for tax purposes. There are no inherent tax advantages. Trading should be considered a marketing tool, not a tax tool. As with cash income, trade purchases that are business related are tax deductible.

How do I know how much trade income to include on my tax return?
At the end of the year, Simplicity Barter will total your trade sales and submit this information to the IRS on form 1099B. Simplicity Barter will also send you a copy of this form for your records, sixty days prior to our filing date.

Who decides what price the seller will charge?
Members of Simplicity Barter are expected to trade their goods and services for barter at the same price they would sell them for cash. Violations of this may lead to expulsion of that member. You should report any violations.

What do you do when a member’s prices are higher than those of competitors? Is it better to buy something with trade credits at a higher price or to pay cash at a discount price?
In the event of this, you have to consider how much you actually invested for the trade credit you hold on your account. If your merchandise costs you fifty cents on the dollar, $10,000 worth of trade credit actually costs you $5,000. If you are a service related business, your trade credit may only cost you idle time.
Always remember that you are using your goods and services when making purchases with trade credit, not your cash. It will often be less expensive to pay a little more with trade credit than to get the same article at a little less price for cash. Seasoned traders are always aware of this difference and use it to their advantage. On the other hand, if someone overprices their products or services beyond a reasonable limit, do not do business with them. Instead, call our office for another referral.

May I exclude anything from my inventory?
Yes. You should only trade what you want to trade. The idea of trade is to move excess inventory, which gives you an advantageous profit margin. Reasonable, specific restrictions on certain goods or services are data based by Simplicity Barter to maintain a smooth trading environment.

I have heard that barter is only good for the acquisition of services and not for goods. Is this true?
Barter is obviously best suited to high-margin situations in the marketplace. Margins are highest where businesses trade only their time or where there is an excess capacity such as undersold radio time, hotel space or idle equipment. However, barter can also be used to acquire goods at regular prices if margins are adequate.

Remember:

Every new customer you service after you have met your fixed office expenses (payroll, rent, utilities, etc.) is very profitable. Providing your products and services for even a few new customers after basic expenses are met can make a big difference to your bottom line.

Can my trade credit be spent with other trade organizations?
Absolutely! You may spend your trade credit with any trading member that belongs to one of our national trade network alliances. The Trade Banc and DoBarter alliances are international trade networks with many barter groups. This gives you the ability to spend your trade credits with tens of thousands of other members worldwide. You may take cruises, go to Spain, buy a Euro-Rail Pass, or just go eat at a restaurant in San Diego while you’re on a vacation there, staying at hotel with your trade credits. Arrangements must be made in advance through our office.

How do I get started?
When you are  ready to begin, a member of our sales staff will talk or meet with you. They will discuss with you what you want to trade and how you will spend your trade credit. At that time, you will sign a contract and pay your initiation dues. A member of our staff will walk you through your first sale and continue to suggest ways for you to benefit as a member of Simplicity Barter.