Questions and Answers
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 South Bay Trade Exchange work?
Members of the South Bay Trade Exchange 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 South Bay Trade Exchange. Hotel rooms, resorts, restaurants, painting, advertising, video production, printing and many other goods and services can be obtained with trade credits. South Bay Trade Exchange 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 450,000 businesses, most of them small, currently involved in commercial barter. It is estimated that 75% of the Fortune 500 Companies engage in barter in some form or another.
Why is the South Bay Trade Exchange unique?
South Bay Trade Exchange represents over 15 years of combined experience in the trade industry. 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.
How does South Bay Trade Exchange Profit?
South Bay Trade Exchange collects a small 10% fee on each transaction from the buyer. This fee is a commission fee.
Why a commission?
The fee represents a broker commission. Remember -- trade business is new business. Many businesses are happy to pay a commission for new business.
I already trade on my own; why should I join South Bay 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 South Bay Trade Exchange everyone can trade with any other trading member of the group.
What if I cannot spend my trade dollars on the things I need the most?
When South Bay 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 network 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. South Bay Trade Exchange can help promote your goods or services to other members via our directory, mailing lists, website access 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 South Bay Trade 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. When joining South Bay Trade Exchange you will be reviewed by our experienced team and assessed a credit line. Over time, your credit line may increase depending on your timely payment and need for extra credit.
What other ways are there to use trade?
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.
South Bay 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 South Bay Trade Exchange, we will purchase them in the amount equal to your account. We will credit your trade 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, South Bay Trade Exchange will total your trade sales and submit this information to the IRS on form 1099B. South Bay Trade 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?
Members of South Bay Trade Exchange are expected to trade their goods and services for barter at the same price they would sell them for cash. Violations of this may lead to expulsion of that member.
What do you when a member’s prices are higher than those of competitors? Is it better to buy something with trade credits at a higher price or to pay cash at a discount price?
In the event of this, 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 that you are using your goods and services when making purchases with trade credit, not your cash. It will often be less expensive to pay a little more with trade credit than to get the same article at a little less price for 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 data based by South Bay Trade Exchange to maintain a smooth trading environment.
I have heard that trade is only good for the acquisition of services and not for goods. Is this true?
Trade 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.
Every new customer you service after you have met your fixed office expenses (payroll, rent, utilities, etc.) is very profitable. Providing your products and services for even a few new customers after basic expenses are met can make a big difference to your bottom line.
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, The Trade Alliance , an international trade network with many trade groups. This gives you the ability to spend your trade credits with ten’s of thousands of other members worldwide.
How do I get started?
When you're ready to begin, a member of our sales staff will talk or 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. A member of our staff will walk you through your first sale and continue to suggest ways for you to benefit as a member of South Bay Trade Exchange. Or, simply fill out our sign-up application and get started now.