Barter is a natural exchange in which one commodity is exchanged for another without monetary payment. Barter is considered an ineffective way of interaction between market participants, since it often takes a lot of time and effort to find a partner in a transaction. Barter transactions are formalized by an agreement in which the proportions of the exchange are fixed.
Reasons for barter
In the early stages of the development of commodity production, the exchange of goods was of a random nature and was carried out without the help of money. This exchange was associated with certain difficulties. The requests of the participants in the transaction often did not coincide; in order to exchange one product for another, it was necessary to make a whole chain of exchange operations.
With the development of commodity relations, it became necessary to single out one commodity, which could be used as a universal equivalent in exchange transactions. This is how the first money appeared, gradually barter operations were almost completely replaced by cash.
However, even in a modern market economy, the use of direct non-cash exchange of goods in some cases can be justified. The main reason why barter is still popular today is the lack of liquidity in some businesses. With the help of barter, a company can receive all the necessary resources for its further development, even in the absence of the necessary funds.
Types of barter
There are classic (closed) and independent (open) barter. Closed barter is a one-time, one-time transaction involving two parties. In a classic barter agreement, a certain volume of the transaction is always fixed.
Several parties can participate in open bartering. The exchange can take place at different times. One of the participants in the transaction, having transferred his goods, gets the opportunity to choose another product. The intentions of the participant are not declared in advance and may change over time.
In modern conditions, barter exchanges organized in the form of specialized sites can be used to search for counterparties for a commodity exchange transaction. Such systems make it possible to automatically search for options for exchanging goods.
Disadvantages of barter
The use of commodity exchange operations is fraught with certain difficulties. First of all, in barter transactions, it can be difficult to make a fair valuation of goods.
With large volumes of barter transactions, finding a suitable offer can be difficult. It often takes a long time to agree on the terms of an exchange. Therefore, in the implementation of bargaining deals, additional explicit and alternative costs arise.
In addition, the parties to a barter transaction may face tax problems. When paying wages in kind, the question may arise of how to pay personal income tax or transfer mandatory contributions.
