Budget Trading and ON-Going Contracts

Last updated:

July 17, 2017

Most businesses prepare an annual budget. For some, it is very detailed/high-level and for others, it is merely a guideline. Regardless of the level of detail, here are some questions you need to consider in order to take advantage of trade:

  • Am I willing to change vendors or would I prefer to maintain a relationship with the current supplier?
  • How much savings would I need to gain in order to make a switch?
  • Which expenses would be easier to obtain through trade (i.e. it is easier to obtain services/advertising than items in the capital budget)?
  • Am I comfortable bringing my Trade broker in as a consultant when formulating my budget?
  • Are there areas of my budget where spending more would be advantageous if revenue was available (e.g. outside cleaning service, marketing, staff/customer incentives)?

The standard rule for Tradebank transactions is that single amounts up to $10,000 taxes included must be full trade; with annual contracts or annual supply budgets, the $10,000 threshold can be based on the annual amount. For example, a manufacturer hired a large cleaning company to clean the plant on a weekly basis for $500 a week (i.e. $26,000 for the year). A cash/trade ratio could be negotiated on the contract as a whole. The TRADE Dollar percent/ratio should be clearly stated in the contract.

The details of the contract could include one of the following:

  • A portion of each invoice payable in TRADE Dollars at the time of invoicing.
  • A prepaid deposit in TRADE Dollars (out of which a portion of each future invoice is paid).
  • An agreement that after $X is paid in TRADE dollars the next amount of business is paid in T$.
  • An escrowed amount is released as invoiced.

Obviously deals with a cash portion are less attractive than getting the product/service for full trade. However, an ongoing cash amount can lock in a deal and make it more feasible for a supplier to continually provide a portion in TRADE Dollars. By signing an ongoing contract, the need to go back through the Trade broker for each request from the vendor is removed.

Refer business owners to Tradebank, earn T$200!
Join 200+ weekly readers that are learning how to build a better, smarter business.
Read about our privacy policy.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.