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The weekly newsletter for everyone interested in barter--the world's most versatile business tool!

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February 29, 2000

In this week's report. . .

  • FASB rules against "grossing up" for advertising
  • IBM barter fund announced
  • Transfer buying generates greater growth and cash flow
  • Here & there. . .

 


"Grossing Up" Is Struck Down By Accounting Board

FASB Says Barter Revenue Must Now Meet A Cash Standard

The U.S. accounting rule makers (the Financial Accounting Standards Board) have made a rule which is intended to end an accounting abuse in which cash-strapped internet companies "gross up" or increase the revenue they earn from barter deals when they routinely trade advertising with other web sites.

Specifically, FASB said companies can continue to book revenue they receive from bartered advertising...with one big caveat. They can only include revenue from advertising barter transactions so long as they have a history of receiving cash for "similar advertising transactions," and those deals didn't take place more than six months prior to when the barter actually occurred.

And FASB also now wants the bartered amounts disclosed in a footnote...something companies now don't routinely do.


$500 Million IBM "Barter Fund" Announced

IBM Global Financing has established a $500 million global fund to provide financing for IBM hardware, software, and services. The new fund will expand the company's support to fast-growing business-to-business internet companies.

The financial support of the $500 million investment fund will be in the form of "equipment and services," not cash. And IBM will take back "equity" in emerging, fast-growing net generation companies only after they have already completed their first round of venture capital financing.

IBM Global Financing is the world's largest IT (information technology) financier...serving customers with leasing and financial solutions in more than 40 countries around the world.


"Farm Out" Some of Your Company's Tasks To Other Trade Exchange Members

Transfer Buying Is The Way To Generate Faster Growth and Greater Cash Flow

Most companies are very good when they focus on their main tasks...what they are experts at. Unfortunately, however, there are other tasks within the company that also need attention for a fully functioning operation.

Although many an entrepreneur wears many hats, at some point in time one realizes that this has to be answered. Do you continue to do everything yourself? Or, would it be smarter to work with an outside firm? One that "specializes" in the different tasks you've been doing grudgingly to save a few dollars.

Working with an outside firm is known as "outsourcing," and is a growing trend these days because it frees you to concentrate on what you do best. An excellent way to get the maximum benefits from your bartering efforts is to subscribe to the theory of "transfer buying," i.e. working with outsourcing specialists and paying for their ongoing fees with trade rather than cash.

The most popular outsourced services are financial in nature: payroll, tax compliance, claims administration, etc.

To get started on your outsourcing situation set up an appointment with your trade broker to go over the list you've compiled of tasks that might be done by outside firms.

See who the specialists are within the exchange and then go about interviewing them for a long-term relationship. In your interview you will want to consider the three Cs: cost, credentials, and client recommendations.


NEXT ISSUE....THE ZEN OF CASH FLOW, or How To Use The Leverage Of Barter. Don't miss it!

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Here & There. . .

  • In BarterNews issue #51 we reported on the incredible barter arrangement Atlanta-based Delta Airlines pulled off with Priceline.com. Showing how phenomenal the deal was, came to light on Delta's recent 3-month earnings report where they provided the facts...a stunning gain of $596 million from the sale of only a portion of its stake in internet ticket seller Priceline.com.

  • Another sterling name, Big Five accounting firm Arthur Andersen, is the latest company to establish a large venture fund ($500 million) to take equity stakes in web companies...a strategy once considered too risky by accounting, legal, and other advisory firms but now becoming more common. (Arthur Andersen is entering a crowded field, however, as there are more than 1,200 venture companies in the U.S., according to Venture Economics.)

  • Director Tim Burton (his Sleepy Hollow raked in $97 million at movie theaters this past Christmas) is bartering his creativity, and will produce original animations for entertainment web site Shockwave.com. Under the deal Burton will receive cash for his production costs and an equity stake in Shockwave for his creative endeavors.

  • Intellibarter continues to offer a few tickets to Hollywood events as a promotional tool to build traffic. This time around they offered on trade two tickets to the 42nd Annual Grammy Awards, which were held last Wednesday at Los Angeles' new Staples Center.

  • A new web company, ibart.com, expects to begin operation within three months, bringing barter and trade to the Internet using a magnetic-stripe card similar to a credit card to monitor spending and available credit within the system. VirtualSellers.com has been selected to develop, host, and maintain the site, search engine and customer profile system for ibart.

 



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