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| What Is Corporate Trade? |
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Several characteristics distinguish corporate
trade transactions from other more retail-oriented, barter transactions.
The corporate trade model is frequently
used for single, large-scale transactions, rather than multiple transactions
of more modest values. In addition, barter companies using the corporate
trade model purchase excess capacity or inventory outright. These transactions
are highly leveraged, thereby allowing clients to receive up to full
wholesale price for their excess inventory in cash equivalent trade credits.
Purchases made by the seller are financed
with a mix of both trade credits and cash at a price that is competitive
with the item's cash value. For example, clients purchasing printing
services with their trade credits through a corporate barter company
work in tandem with their purchasing departments, which provide benchmark
budgets that detail the full cash cost of the printing projects. The
corporate barter company would then take this benchmark price and identify
a print house to complete the job on a part cash/part trade basis.
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| Why Trade through NTA's Corporate Trade Division? |
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The NTA Trade advantage, when compared
to other corporate barter entities, is its open approach to sharing information.
We believe that it is in everyone's best interests to keep the process
open and to allow clients to work directly with vendors. This open system
also enables clients to be fully involved throughout the entire process,
with no need to relinquish any decision-making authority to the corporate
barter company.
NTA Trade's niche market is middle-tier
companies with under $100 million in annual sales. While most corporate
barter companies require that an inventory be worth at least $1 million,
NTA Trade evaluates each inventory on its own merit and will consider
purchasing inventories with a wholesale value as small as $100,000.
NTA Trade is usually able to offer
a higher trade component for the purchase of media and other products
and services than other corporate barter companies. The reason for
this difference is that NTA Trade takes a different approach than that
in place at most other corporate barter companies. While other barter
companies make no guarantees as to the size of the trade component
on client purchases, NTA Trade structures its trade agreement with
a fixed trade component on the trade portion of the goods and services
purchased by the client. We believe that the net result of this approach
reduces the amount of cash a client spends when purchasing other goods
and services through our network. NTA Trade's focus on dedicated customer
service enables us to structure each deal depending upon the unique
needs of each client.
NTA Trade has been in business
for over 20 years and has a successful track record of retiring the
trade credits of its clients. References are available upon request.
Our team of competent advertising
professionals can help clients select the right media vehicles for
each advertising campaign.
NTA Trade works with quality vendors
whose commitment to quality and customer satisfaction matches that
of the vendors currently used.
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| Why Trade Excess Inventory? |
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Using a corporate barter company to redirect
excess inventory or excess capacity offers companies of all sizes many
significant benefits. The primary reason that many companies barter their
excess inventories is that barter raises the value received from excess
inventory or from under-utilized and under-performing assets.
A corporate barter company purchases excess
inventories at up to full wholesale value using trade credits in combination
with cash which the seller then uses to purchase advertising, printing,
travel or other goods and services. Trade also allows companies to use
less cash than normal to acquire those goods and services, thereby improving
the company's liquidity.
Another benefit to moving excess inventories
through a corporate barter company's distribution network is that it
maintains the integrity and loyalty of existing dealer networks. Moving
excess inventory through a reputable barter company eliminates the concern
that merchandise might be sold through channels that could interfere
with existing cash markets.
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| What can be Traded? |
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Nearly any product and service can be traded. Examples are:
Excess/Closeout Inventories: Trade enables companies to move excess and closeout inventories
at up to their full wholesale value.
Excess Production Capacity: Participating in a corporate trade network allows manufacturers
to increase production runs, thereby improving plant efficiency and allowing full-utilization of overhead.
Depreciated Assets: Trade can help boost the value from accounts receivables, equipment
leases and real estate that have significantly depreciated in value.
Examples of industries that are especially suitable for trade transactions include:
Computers and Electronics: Computers and consumer electronics
have high manufacturing costs relative to their selling prices, making their loss of value especially critical in an industry prone to rapid product obsolescence.
Through NTA Trade, merchandise that might otherwise be deeply discounted in order to make room for newer inventory can be sold at full wholesale
value into new markets.
Consumer Products: Changing trends, consumer tastes and technological advances often affect
the success of new products introduced into the marketplace and make excess inventories a fact of life. These products can be sold to NTA
Trade in exchange for trade credit at a price much higher than that available through forced liquidation. NTA Trade will identify re-marketing
opportunities that will not infringe upon already-established distribution channels.
Manufacturers: Manufacturers frequently change product packaging and design, resulting
in "dated" inventories. Rather than take these dated inventories back from distributors, they can be re-channeled through a corporate
trade network. The trade credit paid to the manufacturer can be used to offset the cash cost of media and other goods and services while
simultaneously eliminating the losses incurred from using normal liquidation methods.
Real Estate: Excess real estate inventories, like any other excess inventory, can
be converted into trade credits that can be used to purchase media and other goods and services. Real estate that may be seriously undervalued
can often be traded at full book value. Unwanted lease obligations can also be handled in this way.
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| Accounting for Trade |
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Accounting Treatment for Corporate Barter Transactions:
In today's post-Enron, post-WorldCom environment, companies are taking
a more conservative approach to how they account for trade transactions.
All reputable corporate barter companies today recommend that clients
account for the revenues and profits from their barter transactions as prescribed by the following rulings:
The Accounting Principles Board (APB) Opinion includes pronouncements which are generally
applicable to corporate barter transactions in APB No. 29.
FASB also specifically addressed the accounting of barter transactions in 1993 with EITF Abstract
93-11.
The SEC also provides an overview on the accounting of barter with SAB101.
Essentially, these rulings state that barter cannot be used to avoid writing down the value of a depreciated
asset. A barter transaction cannot really alter the value of an asset simply because more is paid for that asset. With this in mind, barter
should not be viewed as an accounting solution but rather as an economic recovery tool that can only be realized as the trade credits received
from the barter transaction are actually utilized and the client receives value. What the above rulings presume is that only the actual value of
the asset being traded can be determined. The value of the trade credit, on the other hand, can only be determined after it is utilized.
NTA Trade recommends that clients write down the asset being sold in exchange for trade credits at its fair market
value and record the economic gain received as the trade credits are spent. The only exception would be with clients who have a historical
record of trade credit redemption that can be used to demonstrate its value. (See EITF 93-11)
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