Barter Exchange System: Everything You Need To Know

In 'The Economic Consequences of the Peace', John Maynard Keynes wrote: "With the breakdown of money economy the practice of international barter is becoming prevalent".

In fact, it is interesting to note that the barter system of exchange is the oldest known form of commerce. Moreover, what makes it especially unique or one of a kind is the fact that it is conducted on the basis of equivalent estimates of prices and goods, without the use of actual currency or any currency medium. Bartering can be seen as a great hack for any small business because it is a means to fetch vital services, products, or inventory at a minimal charge while also developing collaborative partnerships. Barter exchanges support customers and companies in a local economy. It stimulates small businesses by transferring services and products available for other services or goods with higher value because it is not as accessible to the business.

History about Barter

The word 'Barter', which is derived from old French 'bareter' refers to the act of trading between two or more parties, of goods or services for other goods or services, without the use of money or any monetary medium like credit cards. So, the underlying premise of barter is that two or more individuals or companies or countries negotiate to determine the relative value of their goods or services and offer them to the other in a mutually favorable exchange. For example, if we were to talk of barter at a very primary level, it could be the exchange of vegetables for chicken or rice and vice versa. Companies may barter because they may not possess the cash or credit required to buy the goods or services they need. As for countries, they barter when they are in debt and unable to obtain financing.

The barter system preceded the monetary system. The first instances of trade were through barter agreements. The Mesopotamian tribes who practiced barter around 600 BC were pioneers in this field. The barter system was then adopted by the Phonecians, who started trading across the seas. The Babylonians too followed suit and bartered goods for spices, tea, and weapons. In the early day’s goods such as animal skins or salt served as a currency that could be exchanged. The barer system found takers among Europeans and colonial Americans too.

The barter system gained popularity during the Great Depression of 1930. This was on account of the scarcity of money. The Barter system was a viable alternative to source food in an otherwise bleak monetary environment. The period after the Great Depression saw a resurgence of a currency driven economy. However, with the advent of personal computers and the internet in the twenty-first century, the barter system regained the spotlight. In ancient times the barter system was a local phenomenon restricted to people in the same locality. It then progressed to trade across oceans.

Barter Exchange System in Today's World

Today barter is a global phenomenon. The more individuals travelled, the newer products and services entered the barter system market, which individuals previously did not have access to or the money to afford. The process of bartering created a means for these products to become more accessible to more individuals. Numerous cultures today still use the bartering systems and now, thanks to the Deshpee Barter, bartering is returning to the western world too.

The effectiveness of modern barter is undeniable. It is a singularly efficient means of conserving cash, increasing sales and utilizing excess production capacity for businesses across the globe. The internet allows communication on a global scale and this, in turn, gives both brokers and clients access to trade exchanges across the world. Also, technology has ensured simplification in account maintenance, bill creation, and tracking transactions. The barter system benefits all because they receive items or services they need or want without money. Individuals, companies, countries, all benefit from such cashless exchanges especially when hard currency is in short supply.

While skeptics and critics may tend to subscribe to Adam Smith's opinion that barter is "haggling, swapping, dickering", the advantages of barter are far too many to ignore. What better than a system where you get what you want without the hassle of paying currency? Also adding to the attractiveness of the barter system is the fact that it calls for immediate reciprocal exchange. A barter system is an excellent option for those who can't afford to store wealth especially in times of hyperinflation. It is also an effective replacement for money during monetary crises or when currency is either unavailable or unstable. Barter allows individuals to trade items they own, but don't use, for items they need. The cash in hand can thus be used for expenses that can't be bartered such as, utilities, mortgages and so on. Barter also comes with psychological benefits. It can help create deep personal relations between the trading parties.

Advantages of Barter Exchange System

Further, the scope for the direct exchange of goods and services is attractive to many. Barter doesn’t stipulate only goods for goods exchange. One could trade goods for services and vice versa. The icing on the cake is the absolute redundancy of international currency and thereby the elimination of the risk of foreign exchange. Not to mention that barter comes to the rescue when there is limited trust or sketchy information about the creditworthiness of trade partners. Barter enables optimal allocation of resources by the exchange of goods in quantities that represent similar values What's more is that the barter system can help economies achieve equilibrium by virtue of demand equalling supply.

It's all very well to expound theories about bartering, but if you are a newbie, what are the steps you need to take to ensure you get a bang for your buck?

  • First, you need to identify either what goods you are willing to exchange or what skills you have to offer. Make an inventory of the things you no longer use or are willing to part with.

  • The next step, calls for a realistic valuation of the items or services which have been put up for the exchange. You could double-check with online sites, to get an approximate idea of the going rate for the products or services, you intend to exchange.

  • Thirdly, you need to identify your own needs. First, you need to identify either what goods you are willing to exchange or what skills you have to offer. Make an inventory of the things you no longer use or are willing to part with.

After all, Barter becomes meaningful only when there is scope for reciprocity. Next comes the search for partners with whom you can carry out the barter. This could be done either by word of mouth or by checking out social networking sites. It's curtains down, once you seal the deal, but not before entering into a written agreement detailing the kind of services or goods that will be involved, date of exchange, reparations that have to be made if anyone of the contracted parties reneges on the agreement and so on.

Advance Your Inventory Management with the Barter Exchange System

Bartering enables you to effectively advance your inventory management by converting excess inventory into resourceful services and products. If you barter, you can prevent having to liquidate excess inventory via drastic discounting. If your business experiences seasonal markets, Deshpee Barter offers a profitable means to use the inventory on a daily basis. Deshpee Barter offers a system to put that excess to use in profitable means. Deshpee Barter accomplishes this objective by matching your services and products with businesses looking to purchase them on trade.

Be Cautious When Bartering

But it is vital to understand that there can be a complication of bartering is determining how honest and loyal the person you are trading with is. The other individual does not have a certification that they are legitimate, and there is no consumer warranties or protection involved. This indicates that goods and services you are exchanging may be exchanged for detective or poor products. But in bartering, the advantages weigh more than disadvantages. There isn’t any requirement of money or barter and also there is flexibility in the process of bartering.

How Deshpee Barter Exchange can Help

You could do all of the above or just visit us at Deshpee Barter and let us take care of your bartering needs for you. We bring to the table affordable, quality services in exchange for your products or services. So, if you seek to get what you want, look no further than Deshpee Barter. Help us help you experience the joys of trading in a cashless market.

Bartering via Deshpee Barter can help a small business to portray the image of being a huge business without the cash-costs incurred by much larger businesses. We help businesses put equipment, inventory, and employees to efficient and effective use, developing new revenue that would not have been available otherwise. That new and efficient revenue can be used to finance the purchase of new equipment, raw materials and services to support the business.

Essentially, a business’s less productive assets are exchanged for more resourceful assets or services via the help of a barter exchange. Barter members at Deshpee Barter can economically expand their reach by marketing their services or products to the barter network members. The larger client base of members offers a huge market and a varied range of trading options!

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Barter Boosts Business!

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