During economic downturns, such as high unemployment and cash shortages, bartering is always a go-to solution. This is what BizX is seeing during the economic hardship businesses are facing brought on by the pandemic.
According to BizX, its platform is emerging as an important tool for businesses so they can keep their cash reserves. Cashflow is a big issue even in normal times, but during this pandemic, it is especially challenging.
BizX is a digital barter exchange founded after 9/11 to help forge relationships and help businesses connect. The goal is to provide a platform in which businesses can support each other, especially during times of crisis. BizX is a community of more than 7,000 businesses who trade what they have to get what they need with the goal of freeing up cash flow.
Increased Bartering Awareness
In the press release of this announcement, BizX says bartering (its platform more specifically) is being highlighted by media outlets across the country. Bloomberg, Inc., and Fox are just some of the companies raising awareness about the benefits of bartering.
Although cash is responsible for diminishing the practice of bartering, it is still widely used by businesses large and small. BizX says around 65% of Fortune 500 companies use barter or non-cash transactions as part of their day-to-day business. And globally, 30% of the economy is non-cash.
Bartering is a practice dating back to 6000 BC used by Mesopotamian tribes. And as long as there are people who want to trade there will always be some form of barter. Add an economic downturn and it might be the only way for many people to stay afloat until things pick up.
This is what many businesses are doing now. The CEO and Co-founder of BizX, Bob Bagga, says as much in the release. “Rather than compete with each other, we are now seeing business owners coming together again in informal and formal ways, utilizing BizX and other bartering networks as creative solutions to help weather the pandemic,” says Bagga.
How BizX Works
The transactions in BizX credit or debit members account when they are buying or selling from each other. So, what do they use to make the purchases? BizX dollars. The value of the BizX dollar is the same as the U.S. dollar. The company uses it to record the value of every transaction.
You accumulate BizX dollars when you sell your product or services to another member. And when you are ready to buy, you use it just like cash with other members. The platform allows you to buy and sell on the marketplace, in-location, via the BizX mobile app, and on the BizX Point of Sale web-based terminal.
The transactions are posted to the account of the member as credits (sales) and debits (purchases). This the company says is pursuant to the trading procedures, policies, rules and regulations of BizX and IRS regulations. This means profits and losses will be assessed the same way as cash by the IRS.
According to the Tax Equity Fiscal Responsibility Act (TERFA), all barter revenue someone earns in a taxable year is treated as income. BizX reports all transaction data to the IRS every year and it issues 1099-B forms to members. This allows them to do their own reporting. As the company says, “Revenue is revenue, expenses are expenses.”
As to the type of members on the platform, the company says it represents more than 120 industries. This includes everyone from Fortune 500 companies to pro-sports teams, regional leaders, local companies and startups.
The Benefit of the BizX Platform
Whether it is during a pandemic or not, this is a platform businesses can use to add customers and improve cashflow.
As part of the membership, a business can sell its products and services to members without ever using cash. This not only adds to the customer base of a company, but it is doing so without using cash for the transactions.