Barter giving cash a run for its money

By Wayne Caparas

They say money can’t buy you love.  In fact, it can’t buy you much of anything—at least, not at BXI, where purchases are made with barter, not with dollars.

BXI stands for Business Exchange International, Inc., a third-party barter organization headquartered in California with three branches in South Carolina, including a Charleston office recently opened by Reidinger and Alexander.  BXI serves as the middleman to businesses wishing to trade goods and services using barter units in lieu of cash.

We are not referring to old fashioned one-on-one swap trading, but high-technology, global barter trade where member businesses exchange their goods and services for a new form of monetary unit.

Businesses who trade openly on barter markets, like the one BXI oversees, can in turn use these units to buy virtually anything they can purchase with real money, but they part with just a fraction of the real thing.

Barter banks, however, have no intention of replacing cash banks. “We aren’t kidding ourselves,” says Greg Reidinger, area director of BXI. “We realize cash is king.  No business can survive on 100 percent trade.”

He and partner Greg Alexander stress that their organization has local trade brokers whose express purpose is to assist clients in maintaining a sensible balance between barter and cash business.  Third party barter organizations such as BXI are acting as legitimate custodial banks for barter credits and unlike the practice of two party bartering where neither side reports the transfer, these third party trades “if handled properly” are both legal and pragmatic.

It may be barter, but it’s still business

When the Tax Equity and Fiscal Responsibility Act of 1982 was signed into law, the IRS began recognizing barter trade as a legitimate cash transfer. With the recent advancements in digital communications the learning curve has produced several barter exchanges worth banking on.

In operation since 1960, BXI has enjoyed tremendous growth after the law was enacted.  It now has more than 30,000 clients in 37 states and 5 countries or provinces.  BXI is both the largest and the oldest barter exchange in the country.

BXI’s top local competitor, Barter Brokers Intl., Inc. (BBI) was founded six years ago right here in Charleston.  Founder Bill Bailey now has three South Carolina branches, is soon to open one in Charlotte, and services more than 500 clients.

“We enjoy the competition that BXI brings to our market,” says Bailey. “Anyone who can add positive awareness to our form of commerce is good for our business.”

Bailey has developed an informative Web site (www.barterbrokers.com) and will soon offer credit card technology.

Successful barter organizations take an active role in locating desired products for their members while simultaneously opening untapped markets to enhance their sales.  The brokers generally make their money through enrollment fees and nominal handling charges that members agree are well worth the expense.

David King, owner of A Southern Greeting says, “the fees I pay BXI are minimal, and they are vastly offset by my ability to pay for business expenses with the wholesale cost of my product.”

Therein lies the primary advantage of barter over cash.  It gives the member the ability to exchange products and services at full retail value, thus the profit margin on the transfer is a direct saving on cash flow. This advantage is of greatest value to companies that offer services on an hourly basis.

Through barter exchanges, which also serve as qualified leads groups, businesses can sell their downtime to a captive market, thus creating new income streams at virtually no cost.  Similarly, businesses that need to liquidate outdated or overstocked inventory can find willing buyers through barter exchanges.  In those ways, barter could be considered more valuable than money—maybe even gold.

Visit the Internet at www.irta.net for more information about barter.