BizSugar.com › Finance › Barter Fits Bill for Strapped Firms

Small businesses, squeezed for cash and unable to get loans, are turning to an ancient payment system: barter.

As small businesses find it impossible to borrow money and customers are slower to pay bills, the barter economy is becoming a crucial way for many companies to find the cash they need to keep operating.

"It's really of value to small businesses because it helps them to survive through the recession," says Carmen Bianchi, director of the Entrepreneurial Management Center Business Forum and adjunct professor of family business management at San Diego State University.

Although companies do bartering one on one, many deals are conducted via membership networks in barter companies, where technology and tracking software have modernized the centuries-old system.

Typically, a small business sets up an account at a barter company, similar to a checking account at a bank, for a one-time fee. "Trade dollars" earned for services rendered are deposited into the account and can be spent on any product or service in the network. Companies regularly find others willing to barter via the barter site's online directory of services, email newsletters, referrals or by contacting a firm's account manager.