What are the advantages of trading?
Trade produces new business and allows you to expand your market. Secondly, trade conserves cash. Instead of spending cash to purchase needed goods and services, you can trade your own goods and services. Therefore, cash stays in your business for other purposes. Finally, trade lets you put idle resources to work. Excess time, excess inventory and excess capacity are converted into needed goods or services.
How does a trade exchange work?
Members of the Crescent City Trade Exchange (CCTE) use trade credits instead of cash to do business together. If a member trades one thousand dollars of goods and services to another trade member, that member will receive one thousand dollars in trade credit which can then be used to purchase a variety of goods and services from other members of the CCTE. Hotel rooms, resorts, restaurants, advertising, printing and many other goods and services can be obtained with trade credits. The CCTE is a third party record keeper that sends monthly statements to each member reflecting their purchases, sales and current balance.
What other companies are involved in barter?
Nationally, there are over 100,000 businesses currently involved. Locally, CCTE has over 650 business owners and professionals currently involved. It is estimated that 75% of the Fortune 500 Companies engage in barter in some form or another. Local companies who are currently trading with the Crescent City Trade Exchange include Hunt For Flowers, Cash Register Sales, O'Henry's Food & Spirits, Signature Livery, Crescent City Brewhouse, Villere's Florist, Designs In Jewelry, and many others.
Why is the Crescent City Trade Exchange unique?
The CCTE staff represents over 80 years of combined experience serving trade clients. Our knowledgeable staff makes us the organization with which to trust your trade management, trade brokering and trade accounting needs now and throughout the coming years.
What does it cost to join the Crescent City Trade Exchange?
You can start trading with no upfront or monthly fees. Call the CCTE office for more details.
How does the Crescent City Trade Exchange profit?
While there are no charges to the seller, there is a standard cash transaction fee charged to the buyer for each trade transaction. This fee is necessary to maintain the operating costs of the Exchange.
Why charge the buyer and not the seller? Shouldn't it be the other way around?
The transaction fee is justified by the new business the Exchange generates for its members. The Exchange does not believe it should earn a fee until a member actually spends their trade credits. The Exchange's job is to help each member spend their trade credit as advantageously as possible. Most importantly, this arrangement means you pay only after you receive a benefit from the Exchange.
Why a commission fee?
The fee represents a broker commission. Remember -- trade business is new business. Many businesses are happy to pay a small commission for new business.
I already trade on my own; why should I join the Crescent City Trade Exchange?
The problem with one-to-one trading is each business must want or need what the other business has to offer in equal dollar amounts. Fortunately, at the Crescent City Trade Exchange, everyone can trade with any other trading member of the CCTE.
What if I cannot spend my trade dollars on the things I need the most?
When the Crescent City Trade Exchange does not have the goods or services a member needs, it becomes our job to find them. New businesses are sought to join the Exchange on the basis of their ability to provide goods and services needed by the current membership.
How can I spend my trade?
Make a list of your needs. List everything you normally spend cash on. Do not limit yourself to one or two time item purchases. Use your checkbook as a memory tool. Also, think of your personal needs. If you regularly take cash out of the business for personal living expenses, travel or home improvements -- you should consider using the trade income you have accumulated, and save your cash for goods and services the barter network cannot easily acquire.
What if I earn more trade credit than I spend?
Members should only trade in proportion to their ability to spend. If one member sells goods or services in high demand, it may become necessary for them to limit their trade activity. Our experienced management team monitors all trade transactions, thus ensuring a balance of credit and debit.
How will other members find out about me?
One of our jobs is to promote your business to other members. The Exchange can help promote your goods or services to other members via our newsletter, directory, mailing lists and direct contact.
Is it true getting something for trade can take more time than getting it for cash?
Yes. Sometimes a business must show priority to its cash customers because of cash flow necessities. However, advance planning and communication with your trade broker for alternatives will make trading an effective and profitable experience.
I am looking for a computer. If I save my trade credit, can I get it through the Exchange?
Saving trade credit in order to purchase a specific high demand item can lead to frustration. Be sure to let your broker know of your specific as well as your general needs. Clients should spend their trade credit as they go.
What if I need goods or services and I do not have enough credit to purchase it?
Trade credit lines can be set up for members just as a bank extends credit to its qualified customers. All trade credit loans are backed by acceptable collateral under guidelines established by the National Association of Trade Exchanges and must be repaid in one year.
What other ways are there to use barter?
Many members use trade credit to pay employee bonuses. Some members pay their employees a portion of their salaries in trade credit. At your request, we will set up employee sub-accounts and will assist your employees in using their trade credits as advantageously as possible. Employees need not pay a 10% brokerage fee. This fee can be prepaid when a member transfers credit to a sub-account. It is also possible to pay some of your bills with trade credit. We can help your creditors spend their trade dollars effectively. Paying bills with trade credit is just one more creative way to use your trade credit.
The Crescent City Trade Exchange can even use trade credit to collect past due accounts. Often, a business that owes you is willing to pay on their account with goods or services. If their goods or services are acceptable to the CCTE, we will purchase them in the amount equal to your account. We will credit your Exchange account for the amount of your Debtor's delivery. You can then use that credit to obtain goods and services.
What if I quit the Exchange? What happens to my trade credits?
Any member who quits the Exchange is given three months to spend their trade dollars. Extensions are usually granted for members with large balances.
Are there tax advantages to trading?
Trade income is the same as cash income for tax purposes. There are no inherent tax advantages. Trading should be considered a marketing tool, not a tax tool. As with cash income, trade purchases that are business related are tax deductible.
How do I know how much trade income to include on my tax return?
At the end of the year, the Exchange will total your trade sales and submit this information to the IRS on form 1099B. The Exchange will also send you a copy of this form for your records, sixty days prior to our filing date.
Who decides what price the seller will charge?
Essentially, the market determines just as it does with cash. Where the seller has a sufficient margin, they are expected to trade their goods and services for barter at the same price they would sell them for cash. Where margins are tight, a seller is allowed to adjust their price to manufacturer's list price. Such a situation regularly occurs with electronic items such as television sets, copiers and fax machines. The Exchange frequently publishes guidelines on this issue. By accepting or rejecting prices, the Exchange's members act as the ultimate authority in pricing.
What do I do when trade prices are substantially higher than cash prices?
Usually trade prices are not higher than cash prices. In the event they are, you have to consider how much you actually invested for the trade credit you hold on your account. If your merchandise costs you fifty cents on the dollar, $10,000 worth of trade credit actually costs you $5,000. If you are a service related business, your trade credit may only cost you idle time.Always remember, you are using your goods and services when making purchases with trade credit, not your cash. It will often be less expensive to pay retail price with trade credit than to get the same article at discount cash. Seasoned traders are always aware of this difference and use it to their advantage. On the other hand, if someone overprices their products or services beyond a reasonable limit, do not do business with them. Instead, call our office for another referral.
May I exclude anything from my inventory?
Yes. You should only trade what you want to trade. The idea of trade is to move excess inventory which gives you an advantageous profit margin. Reasonable, specific restrictions on certain goods or services are databased by CCTE to maintain a smooth trading environment.
I have heard that barter is only good for the acquisition of services and not for goods. Is this true?
Barter is obviously best suited to high-margin situations in the marketplace. Margins are highest where businesses trade only their time or where there is an excess capacity such as undersold radio time, hotel space or idle equipment. However, barter can also be used to acquire goods at regular prices if margins are adequate. Where margins are tight, goods can be readily acquired by trading them at list price or with a cash component.
Can I use my trade credits to negotiate purchases with businesses that are not members of the Exchange?
Absolutely! However, take care not to promise anything without first checking on its availability with the Exchange. A member purchasing a $10,000 car from a non-member dealer should ask the non-member if they will accept goods or services for the down payment. If the car dealer accepts, and if the Exchange has what the dealer wants, the trade can be made. Members are always encouraged to negotiate at least a small trade component for purchases with non-member businesses. The Exchange is always willing to assist you in developing any special trade transactions.
Can my trade credit be spent with other trade organizations?
Absolutely! You may spend your trade credit with any trading member that belongs to our national trade network. This way you gain access to the goods and services of literally thousands of businesses across the country. Arrangements must be made in advance through our office.
How do I get started?
When you ready to begin, a member of our sales staff will meet with you. They will discuss with you what you want to trade and how you will spend your trade credit. At that time, you will sign a contract and pay your initiation dues. Our inside staff will walk you through your first sale and continue to suggest ways for you to spend your trade credit.
