BarterPay is a unique platform which retailers and other businesses are using at an increasing pace to meet the cash flow challenges brought on by the COVID-19 pandemic.
John Porter, Founder and CEO of BarterPay, based in Hamilton, Ontario, said the unique concept helps business owners barter their sunk-cost, idle inventory (or spare capacity) for what they need instead of having to dip into precious cash.
“We’re a social impact enterprise that helps any business (or charity) in Canada get the things they need without using money. Instead, they can just trade their own goods and services to acquire what they need,” said Porter.
“Barter is the oldest form of commerce, it’s how business was invented. But, for two parties to enter into a fair trade, each side has to want what the other person has to offer, and here’s the catch, at the same time and at the same value. It’s actually called the double coincidence of wants.
So, to solve the problem, BarterPay has created a platform that allows a business to open an account. They can then offer up their goods in exchange for a Barter Credit. One Barter Credit equals one Canadian dollar for valuation, accounting, and tax purposes. So now, a business can offer up their idle inventory or spare capacity, earn Barter Credits at retail value and, regardless of who’s acquired their goods or services, they can take this newly earned Barter Credit (that doesn’t expire) and use it to barter and trade with any other member in the BarterPay community locally, regionally, provincially or across Canada.
“No longer are businesses having to find direct one-to-one barter relationships, they can simply join BarterPay where it’s a one-to-many bartering ecosystem”, says Porter. “Cash is still king, it’s the oxygen of any business, you can’t run your business on barter, but barter is a tool that must be utilized when goods and services are sitting idle and cash is scarce”.
The concept is now in over 20 cities across Canada from Victoria to Moncton and growing quickly. There are close to 4000 businesses already on the platform. Businesses are joining daily and Porter said the network effect is starting to kick in. “The bigger the BarterPay community gets, the bigger it gets”, says Porter.
They now have signed partnerships with numerous associations including Restaurants Canada, Retail Council of Canada, Imagine Canada, the Ontario Chamber of Commerce, and many more in the works. These large groups are starting to understand the power of organized bartering and they want to educate their members about how to incorporate this innovative solution into their business, especially at a time where all SME’s across Canada need support.
Typical service-based businesses are attracted to the system for a number of reasons. What’s the value of an unsold hotel room? An empty seat at a sporting event? What’s the value of an unbilled hour for an architect, dentist or massage therapist?
“Service-based businesses like to use BarterPay because they can take what would be expiring time with no value, and monetize it at full value into Barter Credits. Then, they can use the Barter Credits to offset regular cash expenditures,” said Porter. “This improves their bottom line tremendously and also brings in brand new, unsolicited clients and customers, people who were not spending with them before”.
For the retail system, they’re attracted to barter because of idle inventory that normally would be sold for heavy discounts. Now, they can take all this paid-up inventory, that’s not selling, and barter it to get back what they need all while realizing their full margin on the goods.
“Right now there are thousands of retailers sitting on idle inventory, they simply couldn’t react fast enough to the pandemic shutting things down”, said Porter. “We’ve had lots of retailers, big and small, utilizing BarterPay to convert their extra slow-moving goods into Barter Credits so they can further their business during this difficult time”.