Bartering The Way To Wealth
Sun Herald
Sunday July 30, 2000
WHILE businesses get their minds around the paperwork wrought by the GST, a growing number have gone back to the future. They are bartering.
But the digital age of bartering has a new twist and an unexpected bonus.
It's all conducted electronically by Bartercard so that each business earns or pays for its goods and services from trade dollars which are credited to its barter bank.
The bonus is that although trade dollars and cash are interchangeable, offering your own produce as a barter payment is in fact cheaper than paying cash.
This is because when you barter you're not taking either your own or anybody else's profit margin into account. So for a restaurateur who pays a printer, say, $2,000 to print the menus, his $2,000 in meals in return might only cost him $1,200 because the rest is a profit margin.
The key to Bartercard, then, is that it's a combination of a closed club and pyramid selling: the more the businesses within the network trade with each other, the better off they all are.
Mind you, there's nothing sinister in this it's the same principle for countries trading with each other. The more trade there is, the better off everybody is (just ask the starving North Koreans).
Bartercard has thrown in a sweetener that guarantees that its members will generate new business.
It offers a $5,000 to $10,000 interest-free line of credit of trade dollars. The business can spend its trade dollars with any of the other 19,999 members.
That means the Bartercard HQ has to make sure $5,000 to $10,000 worth of business is placed with it, otherwise in the words of one Bartercard broker, Patrick Gaul, from Sydney's Hills district, ``we'll go broke". Now that's some incentive.
Say a business buys a photocopier for $1,000 using the free credit. ``We have to bring in business to pay for it," Mr Gaul said.
But he said the big advantage of Bartercard was that it conserved cash.
``You're not paying an overdraft and you are using the value of what you produce rather than cash."
An astrologist and numerologist, Victor Voets, based at Bondi Junction, says Bartercard is generating customers who normally wouldn't dream of using his services.
``They have excess trade dollars and so they say `let's go and see what this guy is all about'," said Mr Voets, who claimed his clientele includes a politician.
``They probably wouldn't have come otherwise."
Mr Voets in turn is using his trade dollars at the dentist and local garage and recently bought a second-hand car with them.
It even came in handy for his daughter's birthday.
``I didn't know what to get her and she suggested looking at the Bartercard directory. She picked something from Manly Rollerblades," he said.
The Bartercard directory is the Yellow Pages of bartering.
It has generated business for Mr Voets as far afield as New Zealand, and he estimated Bartercard has increased business by 5 per cent since he joined at the beginning of the year.
``It's extra business I wouldn't have got otherwise. It's the cream on the cake."
Bartercard charges a one-off fee of $895 plus GST to join. There is a 5.5pc fee on each transaction, comparable to a merchant fee on credit cards with one big difference.
``With Bartercard you're guaranteed the business," Mr Gaul said.
The Bartercard group is now in eight other countries and boasts annual turnover of $600 million. It was forced to drop its recent planned float because of poor sharemarket conditions.
© 2000 Sun Herald