Barter is not new, but its use is picking up in lean times. With companies trimming costs in the recession, barter is a potential tool for either the business owner or financial manager to leverage a company’s cash.
Without barter, Danielle Williams could not have renovated Oceans 234, a Deerfield Beach, Fla., restaurant.
Nearly half the cost of a $170,000 renovation in September was covered by exchanging services through NuBarter, a barter exchange.
It’s an alternative to seeking business loans, which have been difficult to secure in the economic downturn.
“We’re helping them survive the recession,” says Karen Roumay, owner of the Delray Beach-to-Deerfield Beach territory for NuBarter.
“Danielle could never have done her renovation. Who has $90,000 in their pocket right now and who is lending $90,000 right now?” Roumay says.
NuBarter’s members include four printing companies, two pest-control companies, graphic designers, commercial and residential cleaners, auto repair centers, tire stores, hair and nail salons, 24 restaurants, and two hotels, Ocean Point Resort in Pompano Beach and the Bridge Hotel in Boca Raton.
Members pay a one-time fee of $395 to be in the exchange and 10 percent when they purchase items with their barter dollars on NuBarter, Roumay says.
Two competing companies, Itex and Trade First, also provide bartering services in the area.
“In last three years, I’ve saved $150,000-$200,000 on trade,” says Richard Moseley, who owns a painting business by his name in Boca Raton. “I don’t buy anything unless I can buy it on barter.”
For his business, Moseley buys materials through barter. For his family, he uses trade for goods and services including his accountant, lawyer, dentist, chiropractic services, car repair and tires.
Moseley, who has been in business for 25 years, says his business would have failed in this recession if it had not been for barter. “I don’t know how I would have gotten the money to pay for materials,” he says.
“If you’re a company that has any kind of idle time, space or resources not being used all the time, then you should definitely be on trade,” says Moseley, who has been using barter for the past three years.
Business has fallen off more than 60 percent since the housing market turmoil and recession, so two years ago, Deerfield Beach business owner Jordan Katz turned to barter.
Katz, owner of Discount Mike Window and Floor Design Center, says barter has brought him new customers. “We’ve been able to generate sales from customers that otherwise we would not have received,” says Katz, who has been a member of NuBarter for two years and does a couple thousand dollars a year in barter. “It’s another avenue of potential customers.”
Discount Mike barters its window treatments and 50 percent of its flooring, with the other half a regular sale, for services and items including advertising, office supplies and promotional items.
Businesses may not find everything they need through barter, but they trading services or products and free up the cash for other needed items, Roumay says. “If you want 12 flat-screen TVs for Christmas, I can’t help you. But if you use a lawn service on trade, then you’d have enough cash to pay for the flat screen.”
A trade is considered an expense and exchange members receive a 1099 tax form with their trade information at year-end. If it’s a personal expense, it can’t be taken against the business.
“None of this is done off the books,” Moseley says.
(c) 2009, Sun Sentinel. Source: McClatchy-Tribune Information Services.