Barter is the method of trade in which goods or services are directly exchanged for other goods and/or services, without or with minimum use of money. Historically barter operated instead of money as the primary method of exchange. This also occurred throughout history in times of monetary crisis, when a currency was unstable, or devalued by hyperinflation or recession. Nowadays, however, barter is a major force in the economic world.
Ormita arrived in Australia this month and already has several companies interested in barter.
“Although companies do bartering one on one, many deals are conducted via membership networks in barter companies, trade associations or commerce networks; where technology and tracking software have modernized the centuries-old system,” says Daniel Evans, Ormita CEO. “Instead of using direct barter, we've created a large network for businesses - small and large - to exchange products and services."
In multilateral barter, exchanges do not need to be direct. Instead three, four, five and six-way transactions are possible. Transactions can also take place at different times so no single supplier needs to “swap” their product or service immediately but can do so over a period of time. In these instances the value of the deal is recorded centrally and the process managed by a barter exchange organisation like the Ormita Commerce Network.
“Nearly every business faces the problem of cash flow management. Issues that contribute to the need for cash flow management include highly competitive markets where constant advertising is a mandate, increasing business expenditures to attract consumer attention, planned or unplanned downtime, perishable inventory and the necessity of discounting inventory. Modern, multilateral barter helps businesses alleviate the affect of these problems,” says Ormita’s Daniel Evans.
Ormita operates an accounting system with a virtual value unit ("barter dollars," for example) to measure and balance exchanges. 1 barter dollar = 1 AUD in value. When a sale is made, the members account is credited. When a purchase is made, the members account is debited. The sum of all accounts in the exchange equals zero — so there is always something to buy and there is no inflation in the network.
According to Daniel Evans “Whenever someone is in credit, there is always one or more businesses in debit to an equal amount elsewhere in the system. It always balances out.”
With the economy being so tight that businesses were looking for alternative ways of attracting new customers and getting things done without spending cash — Ormita’s multilateral barter platform may be one such solution.
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The Ormita Commerce Network is offering free membership to businesses interested in barter. No matter what you sell, or what you want to buy, come and talk to them and they will set you up with an account.
Gigi David, Broker Manager
Ormita Commerce Network
152 City Road London
EC1V 2NX
Tel: 0203 355 1381
Web: http://www.ormita.co.uk