Barter - Can We Still Use It?

"To Barter: The exchange (goods or services) for other goods or services without using money." Yes, you have another payment option.

Is there more than one form of payment?When you provide a service or goods to another person or entity ie: sell something to someone to make money, we assume that you would get paid in some form of currency. The amount exchanged would equal the amount agreed by both parties. This is a perfectly good assumption and it is the normal in most of the world. Gone are the days when a bartering worked, yes? No!

Saying that, Is currency the only form of payment? The answer is "No".

"Barter: exchange (goods or services) for other goods or services without using money."

Are there other forms of payments that are legally allowed to take place between 2 parties? What would you say?The answer is "Yes". To Barter good and services dates back to whenever there was a need one person needed that he could not do themselves. Money in the form of payment came in (relatively) recently.

Terms and Conditions ApplyThere are conditions attached to this scenario though:

1. Both parties have to be in agreement with the arrangement.
2. The items / services exchanged have to be valid and able to valued at the time of exchange
3. The value of the items or services have to be relatively even.
4. The exchange has to be reported in both parties accounting records.
5. Communication must be open especially when changes are made to agreement.

ExceptionsThere are always exceptions to the rules and this scenario is no different. There are pitfalls to every transaction and this is particularly true in this instance. It can get very ugly very quickly. This is why the above conditions have been put in place. The agreement may have to be in writing and signed by both parties.

The "Go Between"Currency (or money) is merely the "go between" 2 parties offering services / items to each other. Take that "go between" away and you still have a valid transaction just minus the money. This transaction type does not happen all that often because money is so easily moved between parties. It is also simple to value an item or service with a monetary value.

Example:Suzie runs a digital marketing agency. She is doing okay in business but it struggling to pay rent on the small office she rents from James for R 2 500. James, being good with business, suggests that they enter into a barter type agreement.Suzie now does the digital marketing for R 2500 and James has the rent "paid" for the same amount. James ensures that both of them are happy every quarter with the price and that he and Suzie both record it in their accounting system. This is done by each issuing an invoice to the other party.