What Are Trade Dollars and How Do They Work?

Bartering for services and goods is an industry fast growing in its popularity. Taking into consideration the economy constraints and the fact that cash money is harder to come by than ever before, the barter system has gained quite the following.

Though it’s still a system that’s based on the century-old structure, bartering has now developed a rather sophisticated form on both small and large scale.

Bartering when done at greater levels through barter exchange companies uses fair market value to determine the price of the purchase which is then credited to the organization’s account as Trade Dollars.


Trade Dollars

Just like cash, and using the same value for currency, trade dollars are the unique form of currency that gives a business purchasing power within the scope of a barter exchange company. These trade dollars are a part of the individual accounting unit of exchange each bartering service provides to their members. These trade dollars are used by the barter service to record and maintain the value of the business deal and keep strict documentation for taxation purposes. The barter exchange acts as a bookkeeper for the members of their network, keeping a track of all the trade dollars that the barter participants spend, earn and accumulate. These records are used to trace a company’s spend ability within the bartering spectrum, and it also helps them file for income tax return by presenting barter dollars as taxable income recognized by the Internal Revenue Service exactly like a product being sold for cash is.

How are Trade Dollars Used?

While barter exchange companies act as banks or brokerages within the trading spectrum, the trade dollar is the currency used to conduct a transaction within the industry.

Each individual retail trading company has their own unit for trade dollars. These dollars are only available to use within the issuing company only in the manner directed by the procedures and policies set forth by the organization. These dollars may be bought only from the company itself and used to receive the goods and services exchanged within the extensive network of members of the organization.

The trade dollars are not considered legal commodities or securities in the outside world where hard cash is used as means of payment. Nor are they redeemable from a regular bank.

Within the issuing retail barter exchange, a business may be able to get credit worth a specific amount of trade dollars to conduct the transactions they need. This credit is payable back to the barter exchange during a specified amount of time. However, it does not necessarily need to be returned in trade dollars. Business can opt to repay the trade credit by offering their goods and services to the trading exchange itself.

About Author: Paul Conant With more than 25 years of experience in building businesses as well as sales training for small companies and big box retail and barter trade exchanges. Paul is an accomplished entrepreneur with a vision and expertise in business performance and has driven growth in the service, retail, barter and e-commerce sectors. With a blend of creative and operational strengths, Paul, has achieved exciting results in all companies he has worked with. Before founding Gizoom, Paul was a successful entrepreneur in the electronic and barter trade industry. Paul also consults clients in a variety of business concerns as well as developing online strategies for, PPC, SEO, SEM and local search. Website: http://barter.powerlandingpage.com/

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