Upon joining Bartercard, you become part of an enormous community of businesses with a common goal – of taking unfilled capacity within your business and realising this with the help of the exchange. It’s a simple concept taking an old fashioned idea, so why is there a lack of understanding when it comes to Bartercard? There are many myths about what Bartercard is and what it isn’t so we want to set the record straight and dispel any confusion.
In no particular order, here are the most common myths we hear about Bartercard and the truth behind them.
I won't be able to spend my Trade Dollars
This is considered probably one of the biggest objections to joining the network. We don't claim to be able to provide all members with everything they need. We do find that when members are engaged and communicate with their Bartercard Branch, appropriate spends can be identified.
Bartercard spending happens in four stages and your Bartercard Branch will work through these with you.
- The first step is to look at your current spends and seeing if we can offset any of these with Bartercard alternatives.
- The second step is to look at increasing your cash sales through using Bartercard as a marketing and advertising budget.
- The third step is personal spending, many of our members use their Bartercard as drawings helping offset some of their household costs, e.g. mechanic, dinners out, dentist.
- The final thing we look at is wealth creation, this is when our members use their trade to buy assets such as property and share options.
Bartercard is often seen as an excellent way to reward high performing staff in service firms. Some businesses even give staff their own Bartercard cards, which is credited each quarter based on performance so staff can draw upon it as they wish. It’s a great opportunity for individuals to make lifestyle purchases.
“Bartercard is and has been of substantial benefit to our business over the years. Rather than having to spend cash, we were able to utilise our trade dollars on a range of products and services which were usual cash spends, these included tradesmen for R&M, equipment, packaging and packaging supplies, gift baskets and contents for gifts baskets. Recently Bartercard was a huge benefit during our expansion in helping with the fit out, we utilised trade dollars to buy kitchen equipment, furniture, crockery, water cooler, as well as other services such as our website, advertising, printing and products for sale in our café like gelato and high end chocolates.” Linda Bryan, Rococo Café/Cottage Fare Ltd
I can't get my core spends using Trade Dollars
This one has some truth to it. At the end of the day, some expenses (such as utilities, rent, wages) require cash payment, so it's not realistic for a business to run entirely on Bartercard without cash-paying transactions. This is why we always suggest Bartercard to be on top of existing cash business, and make up approximately 10-15% of your business. Your dedicated Trade Broker Team will work with you in identifying opportunities to spend, and help you source products on trade.
Everything is overpriced
Bartercard members sign up to trading terms and the community is self-regulating, so it’s important that members be transparent and promote services fairly to the network. If a member decides to offer services at part cash-part Trade Dollars, the community will soon spread the word and that member will find they’ll struggle for business.
There have been a number of changes to the NZ legislation recently around fair trading which impacts businesses and their obligations when promoting and selling goods. Bartercard NZ has provided a helpful guide that addresses these changes to help not only understand the changes but assist members in meeting your legal obligations when conducting business on the Bartercard Trade Exchange. The Bartercard Fair Trading Guide can be found here.
The fees are too high
Bartercard charges a minimal monthly service fee which is tax deductible. A fee is also charged on all transactions. A guide to our fees can be found here.
The average Bartercard transaction fee is 7.5% and we encourage members not to discount their prices. These fees cover provision of a dedicated Trade Broker Team, full e-commerce capabilities, proactive marketing of your business to over 6,000 businesses nationwide, online monthly statements and an interest-free line of credit. Compare this with Daily Deal websites such as GrabOne & Groupon, which charge a fee of approximately 15-20% of the sale price and stipulate that the offer presented must be at least 50% off the original sale price. Although this may initially bring in new customers, these customers tend to be bargain-hunters which are not loyal to your business, and sometimes discounting can have a detrimental impact on your reputation.
Bartercard is a way of dodging tax
Bartercard income should be viewed as you would your cash income. There are no inherent tax advantages or disadvantages just because you are a member of Bartercard. Bartercard is a marketing tool, not a tax tool.
From an accounting and tax perspective, there is no difference between cash and Trade Dollars with sales being recorded as income, and purchases being recorded as an expense or asset. GST is payable on sales and deductible on purchases. Data for income/expenses should be recorded off these account statements for calculating TAX/GST implications. The fees payable to the exchange incur GST and most of the time are a fully deductible expense for the business.
“It’s good to have an accountant on board who understands Bartercard, and better still be a member, but it’s not difficult - transactions occur the same way as cash purchases.” Russell Herd, Working Feedback NZ Ltd
I don't have excess capacity all the time
Bartercard works supplementary to cash business, and at no point is any member obligated to take on Bartercard business over cash paying business. All members have the flexibility to control which products and services they sell through the Bartercard network and they adjust offers to the Bartercard community (scaling up or back) as it suits their business at any point in time.
For example, if Milly, a restauranteur owns a café that is busy from open til close on Saturday and Sundays, and has no need to try to pull in new business on these days, she can choose to engage with cash paying transactions on the weekend and encourage Bartercard exchanges on weekdays only.
As long as you are clear and transparent as to when you offer Bartercard, you can stipulate which days you accept it.
Are there any more myths out there that you think we need to set straight? Let us know!
