Everything old is new again. As business bottoms out as a result of COVID-10, the oldest form of trade – barter – is doing well. However, this is not your father’s direct trade barter model. And that makes it even more appealing to cash-strapped businesses now.
Just ask John Strabley, President of IMS Barter (International Monetary System) in New Berlin, Wisconsin. Formed in 1985, IMS is the nation’s largest independent trade payment platform.
“Since the abrupt economic shutdown in March,” says Strabley, “Our marketplace has hit record purchasing volume. Our website, IMSBarter.com, has seen a tremendous increase in traffic.”
The trade organization, which has 16,000 members spread across 54 metropolitan markets, does well in the best of times. However, during times of crisis, its business flourishes. It happened during the 2008 recession, and it’s happening now.
The reason is simple: by trading their unused capacity and/or surplus products, stalled businesses can generate income, reduce costs, and purchase necessities without spending cash.
Today’s economic downturn has forced many businesses to pause activities like buying ad campaigns, printing new brochures, and expanding office facilities. But IMS members don’t have to hold off. Trade provides the buying power that’s businesses need to grow, especially now, when creditors come calling.
“In a time where so many places are closed, the network provides a place for business to still happen,” says Matt Woodin of Aurora Fastprint, Inc., a 20-year IMS member located in Illinois.
“We’ve used it for equipment, services, and personal items. Lately, our role has been to provide to others – essential businesses still have printing needs, such as mailings, envelopes, work orders and invoices.”
“Often, the first thing they ask is, ‘can we get it on barter?’.”
How Modern Trade Commerce Works
In its oldest, simplest form, bartering involved an equal trade: one person or business swapped goods or services for something in return. Modern trade exchanges don’t work that way.
IMS is actually a financial services firm. Acting as a third party, it facilitates transactions between businesses by utilizing trade dollars (T$), its monetary unit of currency. Members set prices – in IMS dollars – for their products and services; other members pay in kind through the IMS payment platform. Businesses pay a monthly membership charge, plus a modest fee per transaction.
IMS members include retail and ecommerce companies that sell B2C and B2B products, service companies (contractors, auto repair shops, computer technicians), hotels and restaurants, professional service providers (dentists, attorneys, accountants), business consultants and more. In short, businesses can find virtually anything they might need.
When they welcome this new revenue stream as an accepted payment method, member businesses are in complete control of how – and how much – they trade. Members can set the maximum volume of trade dollars they’ll accept per month, or elect to not market themselves during peak cash seasons. Within this closed monetary network, the client sets their own parameters. This way, businesses can budget accurately; although, right now, some welcome every trade dollar.
As far as tax implications, the IRS treats barter transactions like cash, and transactions are reported accordingly. At the end of the year, IMS provides each member with Form 1099B.
How Trade Commerce Can Help Stricken Businesses Right Now
During the current downturn, IMS Barter offers businesses of all sizes several unique advantages. For example, IMS Barter:
• Provides a broad new marketplace for attracting new customers. (Each IMS member has a listing on the IMS website that’s searchable by industry and zip code.)
• Allows companies to sell their products at full price – no need to discount prices online or liquidate slow-moving stock.
• Creates work for employees, so they needn’t be laid-off or furloughed.
• Allows companies to purchase needed supplies and services without dipping into precious cash reserves.
“Yesterday, one of our brokers was on the telephone with a longtime member who was distraught to tears,” says Strabley. “His family has owned a restaurant for 39 years and he’s frightened he’ll lose it.”
“The broker assured him we’re here to help. Our brokers are having similar conversations across the country, offering support and solutions to members.”
IMS’s most active members generate as much as 10% of their annual revenue though trade. To date, more than 100 members have made more than $1 million in sales, earning their place in IMS’ Million Dollar Club.
That may be a way off for some. But for businesses looking to generate activity while COVID-19 runs its course, joining IMS Barter is a great place to start: www.IMSbarter.com