Commercial Trade … What is it?
Commercial trade is the practice of one business selling something to another business and being paid for it with a notional currency called “trade credit” or “trade dollars”, then using that credit to buy something else from another member-business. Members-companies range from small, one-person businesses up to large, multi-national corporations. One of Canada’s largest, privately-held companies for example, The Jim Pattison Group Ltd., has maintained membership in a commercial trade exchange for decades. When a member of a commercial trade exchange buys a product or service from another member, the buyer pays the seller in “trade” instead of cash.
A commercial trade exchange assumes the role of clearing house for these cashless transactions. And that is exactly the role that TradeLink Barter Network fulfills. TradeLink manages the transaction that take place between members of the exchange. It accounts transaction values, volumes and schedules. It manages the appropriate mix of members. It administers credits, fees and transfers.
Points of Interest
- All fees paid to a commercial trade exchange are a tax deductible business expense
- Commercial trade will enhance your business – not change the way you conduct business
- Businesses accepting trade dollars in payment are paid at the time of the transaction– not 30 or 60 days later
- Overdue receivables can occasionally be settled in trade dollars as opposed to total write-offs
- Conventional banks recognize trade dollars in a member’s trade account as “liquid assets”
- Members can also buy and sell personal things and big-ticket items like cars, boats and houses
- Occasionally, business owners considering membership in TradeLink Barter Network ask, “is this legal?” The answer is YES, it is legal. It is recognized as legitimate business by CRA.
- “will this drive my accountant crazy?” The answer is NO, it won’t drive your accountant crazy – a good accountant will find it brilliant!