UK's first barter system launched

CORPORATE barter is not new. It has thrived for at least the past 30 years in the US where, according to some estimates, it accounts for an annual dollars 6.5bn ( pounds 4.3bn) in trade. In Switzerland, a secretive barter network connects 65,000 Swiss companies, which acknowledge its existence but are loath to give details. Apart from that, the Old World has disdained systematised barter, writes Edward Russell-Walling.

But now a London company has launched the UK's first corporate barter system, arguing that it increases sales, preserves margins, eases cash flow and puts idle capacity to work. The man behind it is Ivor Tucker, a 36-year-old South African business economics graduate who came to the UK six years ago.

His most recent venture - a casualty, he says, of the recession - distributed fast foods to convenience stores. He was introduced to the barter concept last year. 'I was fascinated by the idea and intrigued by the fact that it didn't exist in the UK,' Mr Tucker said. 'So I visited the US to check it out.'

The result is Capital Barter Corporation (CBC), backed by eight private shareholders, including Mr Tucker as managing director. CBC is, in effect, a pool in which credits can be exchanged for a variety of goods or services.

'Straight swap barter is common all over the world,' Mr Tucker said. 'Most major corporations - and certain governments - do a significant amount of business this way. Hotels, for example, may trade rooms for airline seats. But straight swap deals are hard to do, because few companies have goods or services suitable for direct swap.'

The same hotel might be prepared to offer rooms in exchange for, say, a printing job. But what would the printer do with 100 hotel rooms? 'The CBC system does away with these limitations by separating the purchase and sales elements of the transaction - as in a normal cash deal,' Mr Tucker said.

'The printer puts capacity into the system, and does the print job for the hotel. But he does not have to buy hotel rooms in return. He may buy carpeting from a carpet manufacturer, or advertising from a magazine. Other members of the system will buy the hotel rooms.'

Pool members pay an annual fee based on their size, ranging from pounds 200 to pounds 1,500, and are issued with an identification number enabling them to trade through the system.

Buyers and sellers negotiate their own prices and raise normal invoices, including VAT, where applicable. The transaction is then captured on the CBC system, which debits and credits each account in so-called 'trade pounds' within 24 hours.