We all need cash to run our businesses. Unfortunately, many small to midsize businesses go through periods where cash flow is tight. Sometimes it is just a seasonal dip, an unexpected expense, or a customer delaying payment on a large invoice. Other times it is more systemic to the business you are in, and a larger change needs to occur in order for you to advance. In either case, barter can help you find your way!
If you are having difficulty getting past some payables, keep reading…
HOW TO CLEAR DEBT USING BARTER
1) Contact your Barter Coach (a coach is assigned to every business who is a member of BarterPay – your own concierge of sorts) and chat about your situation. Next, determine who will be making the first approach to the creditor. Note that calling the creditor first gives you the opportunity to present a possible solution and make it clear that you are trying to act in good faith. In the case where the BarterPay representative is calling first, you should still contact the supplier to vouch that BarterPay is speaking to them on your behalf.
2) The vendor would be signed on as a member of BarterPay if not already a member.
3) Barter Credits you currently have would be paid against the debt (fees due prior to transfer).
4) Additional business would be sent to you to settle the remainder of the debt (within a short period of time).
5) The remaining debt would be settled in Barter Credits (fees due prior to transfer).
The creditors may request or you might suggest a premium of 10-20% be paid to convert existing cash debt to Barter Credits. (e.g. to convert a $10,000 loan to trade they want an additional T$1,000). Alternatively, some creditors are only willing to discuss a Barter Credit payment as long as a % is paid in CDN dollars. (e.g. settlement is $2,000 and T$8,000 with the $2,000 due immediately).
It is a good idea to discuss this ahead of time with your barter coach and decide if you want to offer an incentive to convert the debt. You would have to look at your cost of goods sold and the positive effect of getting the debt cleared. It may not be necessary at all. The creditor might be content with being paid the original debt full trade. However, offering the incentive may help move everyone along.
Additional benefits of clearing up past debt in barter:
1. You no longer avoid phone calls, because you are at a loss as to how to clear debit. (We all know this is a thing that people do!)
2. You’re able to continue using your preferred supplier – often times business owners in a bind will stop using the supplier they really want because of debt.
There are many ways business owners can use barter to launch a business, build a business, move excess inventory, fill in downtime etc. For more information contact your local BarterPay Office and Barter Coach.