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April 10, 2012

Written by Bob Meyer, Editor of BarterNews

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From the desk of Bob Meyer... 04/10/2012

Barter Reality TV Show Rescheduled

The filming of the Zander Board reality TV show has been rescheduled for April 30 (Monday) and May 1 (Tuesday), at the 4-star Hawthorne Suite Hotel. The facility, just outside Atlanta (GA), was built for the 1996 Olympic Games held in that city.

For further details and reservations contact Raye Turner, president of Rayedar Productions, at 678-661-1499.

China Now World’s Largest Art Market

Art auction house Sotheby’s is launching its own (15,000 sq.-foot) year-round gallery in one of Hong Kong’s prime commercial areas, the Admiralty Business District, in mid-May. China’s appetite for art is booming and now has surpassed the U.S. as the world’s largest art market.

Quick Cash For 1% If You Own Luxury Personal Assets

Do you own fine wines, art, diamond jewels or antique cars? If so, and you want to borrow money, it’s available to you at an interest rate of 1% through Borro.com. Typically they will lend 50% to 70% of the collateral’s value.

Donate Time To Experience “Time Affluence”

Are you feeling starved for time? Then it’s time to make a change, says researchers at the Harvard and Wharton Business Schools. Their studies show that people who donate time to others actually experienced a feeling of “time affluence,” i.e. a sense of having ample time to complete other tasks. While even small tasks can provide this sense of expanded time, the more accomplishment one feels the more time they feel they have.

Sales At Fast-Food Restaurants May Surprise You

The top three fast-food chains in America, McDonald’s, Wendy’s and Burger King, compete feverishly in the marketplace. Their average annual sales (per restaurant) are: McDonald’s $2.4 million, Wendy’s $1.5 million, and Burger King $1.2 million.

Delta’s “Out Of The Box” Business Plan

Delta Air Lines is buying an idle Pennsylvania oil refinery for $150 million, which is about the cost of a new wide-bodied aircraft. They would be the first U.S. airline to own a refinery. It’s estimated Delta could save up to $20 a barrel on some of its $140 a barrel fuel costs.

Inasmuch as they spent $11.7 billion for fuel last year, the world’s second largest airline likes the potential of the possibilities.

New U.S. Listing Information ...

Space Coast Barter
4656 Burkholm Road, #200
Mims, FL 32754
Ph: (321) 264-1615
E-mail: tradedesk@spacecoastbarter.com
www.spacecoastbarter.com

All back issues of "From the Desk...” can be accessed by clicking here.

(Please feel free to forward our newsletter to your friends and colleagues. We have a “box” at the end of the newsletter for your convenience. See you next week. . .)

IRTA’s Exchange-Deficits Memo Recommends Guidelines For Prudent Deficit Management

On March 28, the IRTA Global Board of Directors approved a new comprehensive advisory memo titled “Guidelines & Recommendations for Barter Exchange Deficits.” The advisory memo explains how properly managed exchange deficits, that fall within IRTA recommended guidelines, can increase trade volume by “providing the right level of money supply sufficient to allow members to buy and sell freely within the system.”

This memo (see below) defines the different types of deficits that exist in barter exchanges (exchange and system deficits) and presents a simple and easily understandable recommended parameter of 2.5 to 3.0 times monthly-averaged trade volume as a maximum threshold. It also provides specific recommended methods for exchanges to reduce their deficits, so as to fall within the suggested IRTA guidelines.

IRTA Global Board member and officer Annette Riggs calls it a major positive step for exchanges and the public, “IRTA’s Exchange Deficit Memo provides a guide for industry veterans and those new to the industry to understand in clear terms the importance of trade deficit management and tax implications for trade exchanges. Following this advisory will benefit the health of the exchange, the exchange members and the community at large.”

IRTA President, Michael Mercier also views the Advisory Memo as an important piece in protecting the public, “When a trade exchange ceases to exist it is a problem to the owner and the members as well. This directive will reduce failures in the modern trade and barter industry by helping owners and also protecting the public.”

Members of the IRTA Rules and Regulations Committee are: Michael Mercier, Mary Ellen Rozinski, Annette Riggs, Harold Rice and Ron Whitney. John Strabley also shared his wisdom and experience on the subject with the committee.

 

Guidelines & Recommendations For Barter Exchange Deficits

March 28, 2012, revision

I. Preamble

In 1995 IRTA commissioned the top ten international accounting and advisory firm, Horwath & Horwath (now Crowe Horwath International) to examine whether the creation of exchange deficits represented a sound financial practice, and whether the IRTA recommended guidelines restricting exchange deficits was reasonable and prudent.

The 1995 Horwath report titled “Deficit Spending Limits of Reciprocal Trade Exchanges” concluded that reasonable deficit spending, within IRTA's pre-determined guidelines, represented “sound commercial practice and is desirable because of the benefits to trade exchange members.”

The purpose of this memo is to define the parameters of reasonable deficit spending so as to provide a clear standard for trade exchange owners to follow.

II. Monetary Management Responsibilities Of A Trade Exchange

The barter exchange must have the authority to assure adequate liquidity exists in the barter system by regulating the supply of trade dollars (money supply) needed to finance the smooth turnover of products and services being offered in the exchange. Simply put, there needs to be enough trade dollars in the system for members to be able to buy goods and services they wish to purchase.

To perform this function, the barter exchange issues credit lines to credit-worthy members which represents the main source of the money supply when the credits are spent in the trade exchange.

Exchanges will typically reserve the right to borrow trade dollars from the exchange via a permission clause in their membership agreement. When a barter exchange borrows trade dollars from the exchange and spends those trade dollars within the system it also increases the supply of trade dollars in circulation.

The key question is: What is the proper and prudent amount of an exchange deficit so as to provide an appropriate level of money supply elasticity and how is such a parameter defined? With too little money supply members are unable to buy, and with too much money supply members will not sell and the system will freeze-up. A properly managed deficit will provide the optimum level of liquidity in the system so as to maximize exchange member trading.

There are two types of deficits in a barter exchange system, exchange deficits and system deficits. The combined total of both types of deficits equals the total deficit of the system.

1) Exchange Deficits

Barter exchanges have a fundamental fiduciary duty to the members of their exchange to manage the exchange in a prudent manner. In addition to the trade exchange’s role as the financial exchange manager for the system, the exchange also acts a member of the exchange itself by buying and selling within the exchange.

When an exchange manager purchases more goods and services from the exchange then trade dollars that it earns, the corresponding negative trade balance is known as an exchange deficit. In such cases, the barter exchange is actually borrowing from the membership of the exchange collectively, and the barter exchange becomes the debtor while the exchange members are collectively the creditor. An owner’s personal accounts, employee trade accounts and/or inventory accounts in a negative position are included as part of the total exchange deficit.

important tax note:

Based on the accounting doctrine of “constructive receipt,” an exchange deficit is viewed as taxable revenue by the IRS for the fiscal year it was incurred. The exchange’s deficit created each fiscal year must be reported on the exchange’s tax return as revenue for the year it was realized. If your company has an exchange deficit for the prior fiscal year, your company will owe the IRS taxes on the deficit amount at a tax rate of 34-percent.

important caution:

Exchange owners who fail to report trade income from personal or family trade accounts controlled by the exchange owners, or any other trade accounts that exist whereby the exchange owners receive a direct or indirect benefit, are subject to criminal charges based on the legal doctrine of “larceny by conversion.”

2) System Deficits

Exchange system deficits result from write-offs for bad debt, insolvency or bankruptcy of exchange member accounts and result in more positive balances (liability to members of the exchange) than negative-balances (goods and services owed to the exchange which represent an asset to the exchange).

IRTA recommends that all exchanges create a "member loan fund", (aka as a "bad debt reserve" account), to effectively save earned trade dollars to "zero-out" a member's negative balance account if such account is uncollectible or insolvent. By maintaining a proper member loan fund barter exchanges are able to minimize system deficits because uncollectible negative trade balance accounts are off-set by a corresponding entry from the member loan fund.

A portion of trade dollars earned by an exchange from new member sign-ups, monthly fees, advertising or renewals can be deposited monthly in the member loan fund. The percentage of an exchange's monthly earned trade dollars that should be deposited into the member loan fund varies based on the exchange's overall deficit. A higher deficit requires a larger percentage of the exchange's earned trade dollars to be deposited into the member loan, while a smaller deficit would require less earned trade dollars be deposited.

important tax note:

System deficits are not taxable by the IRS. Therefore, of the two types of deficits; system and exchange deficits, system deficits pose the lesser risk purely from a tax liability standpoint.

III. IRTA Recommended Parameters For Exchange & System Deficits

IRTA studied numerous deficit control models used by leading reputable barter exchanges and obtained the opinions of the top accountants in the barter industry to arrive at the recommendations contained herein.

IRTA Deficit Standard: 2.5 to 3.0 times monthly annual averaged trade volume (calculated on one side only, either buy or sell). For example, if XYZ Exchange's annualized average trade volume is $400,000 a month then the IRTA maximum recommended exchange deficit would be $1.2 million.

IV. Recommended Methods To Reduce An Exchange Deficit

Exchanges that exceed the recommended maximum deficit threshold of 2.5 to 3.0 times their average monthly trade volume should reduce their deficit by implementing the following actions:

·         Spend less trade dollars as an exchange.

·         Create new avenues to earn trade dollars such as selling advertising in your newsletter or website, purchasing inventory at a discount and re-selling it at market value, or charging a fee on your members’ negative trade balances.

·         Maintain a healthy member loan fund to off-set the deficits created by members’ account defaults.

V. Conclusion

Excessive deficit spending by a barter exchange will cause serious liquidity problems in an exchange that will threaten the financial stability of the entire exchange. However, properly managed exchange deficits that fall within the recommended IRTA guideline of 2.5 to 3.0 times the annualized average monthly trade volume (as calculated only on one side) can increase trade volume and revenue by providing the right level of money supply sufficient to allow members to buy and sell freely within the system.

Exchanges that do not meet the IRTA recommended deficit guideline need to immediately implement the recommended deficit reduction methods contained herein to lower their exchange deficit to the IRTA recommended standard of 2.5 to 3.0 times their average monthly trade volume.


Is Your Trade Exchange Missing Out On Valuable New Business?

If your barter company’s listing on BarterNews.com isn’t current, you are definitely missing out on new business. The web site BarterNews.com receives heavy traffic — with over 150,000 page-views every month. Entrepreneurs and corporate executives check the thousands of articles, the weekly “Tuesday Report,” and the “Contacts Section” of our site. They use the latter to find barter companies with which to do business.

Is your barter company’s listing up-to-date?

To keep your listing current is very easy. See the links below to (A) update any changes to your company’s listing, such as new location, phone number, web site or other information, and (B) if your company has not been listed.

Here’s how to get on board:

To make changes to your listing click here.

For new listings click here.


An International Vacation For Very Little Money

A super value (buy) for an international vacation is now available in the marketplace. Cruise deals are available for as little as $50 a day per person for comfortable well-maintained accommodations with maid service, 3 meals daily, plus shipboard activities and nightly entertainment.

Cruise trips are a super bargain and the ship lines can provide outstanding value because of the efficiency with which they deliver their service. For example, the typical cruise ship has teams of room stewards, chefs and waiters working 7 days a week to clean 1,000 cabins per day and prepare and serve three or four meals a day to 2,000 passengers.

When the ship sails from the port of departure, they know exactly how many meals will be served for the entire cruise and the ship has been provisioned accordingly. Every cabin, table and employee is fully utilized, every day. That’s much more efficient and less wasteful than the system land-based hotels and restaurants that must employ to serve a much smaller group of customers who vary in number daily.

As ships have gotten larger and cruise lines have grown into billion-dollar enterprises, feeding and transporting more than 15 million passengers every year, the cruise lines’ huge buying power has reduced their costs for everything consumed on the ship. Plus, larger ships and show lounges spread the cost of entertainers, the captain, officers and cruise director over more people.

And unlike airlines and hotels that accept empty seats and rooms during slow periods, cruise lines will do whatever it takes to sail full.

All lines, except the four 6-star cruise lines, will slash prices as low as they need to in order to fill every cabin. Even the 6-star lines are now offering discounts that were once unheard of.

They do this for two reasons. First, on most lines, a significant percentage of the crews’ compensation comes from gratuities — and there are no gratuities from empty cabins. Second, venues such as casinos, spas, boutiques, photography studios, and excursion desks are completely dependent on onboard purchases, which of course are directly related to the number of people onboard.

All of this has resulted in the best bargains ever for people cruising today.


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The Growth and Use of Secondary Capital (New Money) Creates Unprecedented Wealth In Today’s New Age Of Possibility

There are many forms of secondary capital—which can be defined as any financial instrument that measures and communicates value in a common language. Would you like to see and learn more about the many forms of secondary capital?

 We have 70 free, informative and inspiring, articles for you in our “Secondary Capital Section.”

Check it out... www.barternews.com/secondary_capital.htm.


Get New Money-Making Ideas And Valuable Contacts!

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Every barter company in the world is listed on our web site, click through to our Global List of Barter Companies.


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