By Cheryl Higley
In business, they say, cash is king. But for Grounds Maintenance Services, LLC, of New Berlin, WI, cash is sometimes deferred in favor of the oldest form of payment in the world…bartering.
On the surface, snow & ice management and payment via bartering might seem like an odd match; but Grounds Maintenance Services owner Todd Ruedt has found a way to use it strategically and at very little risk to his company.
The company signed on with its bartering vendor, International Monetary Systems, about six years ago. About 10% of its annual revenue is brought in through the barter network. “Any more than that would be taking away from our cash business,” Ruedt says. “Bartering gives us a nice mix and brings new business that we otherwise wouldn’t have gotten.”
Grounds Maintenance Services’ barter customers still sign contracts like any other client (most accounts are paid seasonally or per-push). The company’s billing software is even in on the action—the program includes a barter payment key so Ruedt can invoice properly. Before accepting the work, he can check to make sure the potential client has the funds available to pay and that they’re asking a fair price.
“We find out more about our clients in the barter world than in cash world. If there are cash fees due up front, we get them. We know they can make the barter payment before the plow hits the ground,” Ruedt says. “It’s just business as usual with a different payment method.”
According to IMS, the Department of Commerce estimates that 20% of world trade is accomplished through bartering—yet that figure is only about 1% in the U.S. Ruedt sees a lot of room for growth within the bartering network.
What appealed to Ruedt as he began researching was that the bartering need not be reciprocal. For example, he plows for a local sub shop but his payment doesn’t come in the form of foot-long hoagies. His payment is deposited into his barter account. He can use those receipts to barter nationally and globally to purchase any goods and services available in the bartering network.
This is where Ruedt has gotten the biggest bang for his bartering buck. He purchases all of his promotional items, printing services (business cards, brochures, etc.), radio advertisements and mass mailers, and employee incentives and rewards (like the company’s annual holiday trip) through bartering.
“I’m paying for those things that previously I would have paid cash for. Now that cash is staying in the business,” he says. He also extends the benefits to his employees. “Rather than give them bonuses, they get to barter for what would be most appealing to them.”
Ruedt cautions that bartering doesn’t fit everyone’s business and that is important to do due diligence before jumping into the mix. A few key points to consider:
1) If you have excess capacity, bartering may be an ideal scenario to shed some of it. “If I’m plowing one property for cash and the guy next door in barter, why not? I can take on more accounts because I have that capacity,” he says.
2) Referrals are key to a successful arrangement. “I’ve found that if you do a good job for the barter client, you’ll gain cash clients.”
3) As long as you use the items you purchase through barter remain business assets, there is no federal income tax. “That’s a huge tax benefit. But you must be very careful. If you use any of the goods or services for personal use, that becomes personal cash and you will be taxed.”
Ruedt says he is able to buy products at cost, which keeps more money in the company’s coffers. “The only drawback that we've encountered is that not all products and services are available.” “If you can find ways to make it work for your business, I encourage you to try it. I have seen a huge benefit,” he says. “I believe we all look for our best price, best product and best service—we have to do that in the barter world as well.”
For more information on IMS and whether it’s worth exploring for your company, visit www.imsbarter.com