Barter can help you conserve cash

Kent Oswald | June 15, 2020

During times of economic uncertainty such as this, you might want to consider conserving your business’s cash by bartering—exchanging goods or services of equal value with another business or person.

 

I first saw how effective barter can be in this industry from my days working for the late Gene Scott, the founder and publisher of Tennis Week magazine. Gene was a master at creatively extending our working capital—for example, bartering the value of ad space in the magazine for hotel rooms at tournaments. 

 

For others in the industry, an example might be for a teaching pro who charges $75 an hour to give a local restaurateur a lesson in exchange for $75 worth of catering at a weekend tennis mixer. A local media outlet might provide $250 worth of advertising credits to a tennis specialty retailer in barter for a $250 store credit. 

It is important the deal satisfies both sides, so make sure to be clear, perhaps even detail in writing exactly what will be exchanged so you minimize any misunderstandings. Also, in addition to bartering locally, consider exchanges that might extend to swapping goods and services regionally and nationally, too.

 

Deciding on a barter versus cash transaction is a bit like choosing the right moment to come to net to shorten a point. Be strategic, and get coaching—in this case, you might want to consult your accountant for clarification on how this might affect your reportable income. (Keep in mind that the fair market value of any services or property received through a barter is taxable income, and both parties must report it to the IRS.)

 

If you’re looking to limit your cash transactions, consider the value of what you provide to obtain the goods and services you want.

 

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Freelance writer and editor Kent Oswald is a Contributing Editor for Racquet Sports Industry magazine.
 

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