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Barter

Barter/18.8″/dt1st/mike2nd By WADE DANIELS Staff Reporter If the stock market fell another few thousand points, unemployment shot up to double digits and businesses everywhere teetered on insolvency, things wouldn’t be half bad for the American Commerce Exchange Inc. in North Hollywood. That’s because the company facilitates barter trades between businesses, and in times of recession, when companies have more down time and slow-moving inventory, there is more incentive to barter, said company President Mark Tracy. That doesn’t mean business hasn’t been robust for American Commerce during the strong economy of the past two years. “Even though the economy is good, business people are realizing they can trade for things they need instead of paying cash,” said Tracy, who co-founded the company in 1982. “We also became computerized a couple years ago, meaning we can do more trades and be more efficient.” About 600 companies in the Los Angeles area are clients of the exchange. They are mostly small and mid-sized businesses, trading things like attorney and advertising services, hotel rooms, printing services, podiatry services and travel services. The exchange handles about $300,000 a month in transactions, up from $275,000 a month last year and $247,000 a month in 1993. It profits by charging a 10 percent cash commission on the value of each transaction, paid by the buyer. The fee is 15 percent for transactions that require more accounting work, such as for advertising services. Tracy said the company signs up about 15 new members a month (with a one-time $295 sign-up fee), and loses a few that go out of business or aren’t satisfied. The exchange is open to many different types of businesses, but does not accept companies whose products aren’t widely used. The exchange occasionally discovers that its clients have begun trading directly with one another. When this happens, Tracy issues them a warning to stop, and boots them from the client roster if it continues. “That happens once in a while, but most clients are willing to pay the 10 percent commission because I am bringing them extra business,” Tracy said. Nationwide, about $408 million worth of barter exchanges were transacted in 1996 (the latest available figure), up from $300 million in 1993, according to the International Reciprocal Trade Organization, a barter industry group. The North Hollywood company was one of some 1,248 trade exchanges that existed two years ago. Even though there is a commission involved in bartering, Tracy insists the transactions still involve savings for participants. He cited the example of a florist who barters $100 worth of flowers for $100 worth of another product or service. In that transaction, the florist pays a $10 commission plus whatever the wholesale cost of the flowers was say $50 so the florist has paid $60 for $100 worth of services. The exchange’s six employees manage an account database that keeps track of how much in goods and services a company has available, as well as how much they receive. “We do a lot of corporate bartering, it helps keep some of our purchasing costs down,” said Elliott Metz, vice president of marketing for Carroll Media, a division of Van Nuys-based Alpine Pictures. Metz’s company trades production services, or telecommunications services from another Alpine division, for things like vacations and health club memberships for employees. Companies like Carroll Media are able to barter for hotel rooms and restaurant services in other areas of the country because the American Commerce Exchange is a member of a network called the National Association of Trade Exchanges. The 100 or so association members around the United States are trade exchanges whose clients have the ability to trade with each other’s clients. After graduating from college in 1976, Tracy worked as a door-to-door insurance salesman for a few years and also sold office products. He developed an interest in barter after reading some books by an economist named Harry Brown, and attended a seminar on the business. At the event, he met a man with a similar interest and the two co-founded the exchange in 1982. However, the partner died a year and a half later and Tracy is now the sole owner.

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