A barter exchange comprises a group of complimentary businesses, each offering different products and services.
In a solid barter exchange company the number of each 'type' of product or service being offered in the exchange is limited; therefore there is always a demand for every product and service being offered.
In the cash market:
1. A business creates demand through advertising, word-of-mouth and repeat custom.
2. Businesses current customers are limited to the amount of people who see their advertising, hear about them and walk past their door.
3. Virtually all businesses in the cash economy experience times of excess capacity (e.g. unsold appointments, empty rooms, slow moving stock) then they aren't operating at 100% efficiency.
4. The ability to buy and sell is restricted to the amount of available cash in the local economy.
In a barter-exchange marketplace:
1. A business is always in demand because there is only one (or a few) of them competing in the marketplace.
2. The barter-exchange brings customers to the business on a “commission” basis.
3. Value is created through trading needed products and/or services without the use of cash.
Bartering offers a way to turn this excess capacity into a needed commodity unfortunately historic barter has many limitations:
Need – ensuring that both parties want each others products or services
Fair trade - ensuring that the items being swapped have the same value
Timing – if you wish to trade corn for fish you can only do this if corn is in season.
Issuing IOU’s – If a party’s trade takes place now, but one parties product or service is not worth the same amount then one party will have to issue another party an “IOU”
The barter exchange offers a method where the participants do not have to exchange goods or services directly with one another but can instead exchange using a barter “currency”.
This currency is, in effect, an “IOU” issued by participants.
Where one member purchases a product from another, they issue this IOU to the seller.
The seller can then redeem this IOU with this business – or any other participant of the barter exchange.
When a business joins the system they list the products or services they wish to sell and they are provided an overdraft in “barter dollars” which they may spend with other participants of the exchange.
One “barter dollar” is the equivalent to one local currency dollar.
When a business sells a product or accepts repayment of an outstanding debt they receive a “barter dollar”. This can then be used to buy goods or services from other participants of the network.
Members do not have to buy from the same business they sell to as Kasoo performs the function of “brokering” deals and offsetting transaction values between participants.
When one member is in debt, they are obliged to sell their goods or services to any member who may be in credit.
The sum of all accounts for members of the network is always zero, even though some will be in credit and some in debt.
This ensures that anyone who has received “barter dollars” is able to spend them on a range of goods or services, making them as valuable as cash.
By bartering the excess capacity businesses are able to reduce their cash overheads and grow their business. Because of the selective nature of the barter exchange every purchase made is matched against a new sale of the businesses own products or services – thereby ensuring growth.
Copying and distributing this article
Ormita provides free updates about the generic benefits of barter to those interested in local currency, community currency, countertrade, reciprocal trade, barter exchange, time dollars, hours and other forms of community trade vehicles.
You may freely copy and distribute this article provided that you attribute the author and/ or source as the Ormita Commerce Network.
About Ormita
The Ormita Commerce Network spans 5 continents, with direct representation in more than 17 countries plus additional partnerships in a further 59 countries. The business allows companies to exchange goods and services on a reciprocal trade arrangement.
Some of our Websites
Ormita Commerce Network Australia – www.ormita.com.au
Ormita Commerce Network Canada – www.ormita.ca
Ormita Commerce Network India – www.ormita.co.in
Ormita Commerce Network Mexico – www.ormita.com.mx
Ormita Commerce Network New Zealand – www.ormita.co.nz
Ormita Commerce Network United Kingdom – www.ormita.co.uk
Ormita Commerce Network United States of America (USA) – www.ormita.com
For Licensee, Franchise and Partnership Enquiries please visit : www.ormitacorporate.com
