Benefits of Trading
Companies of all sizes and in every business category are discovering the advantages of using trade to improve cash flow and reduce excess inventory. Trading is an effective management tool that goes straight to the bottom line and makes excellent financial sense for every business
By trading, a company is able to:
- Increase sales by obtaining new customers.
- Reduce cash outlay – buy products and services with Tradebank dollars while leaving cash in the business.
- Enjoy discounts on trade purchases.
(If profit margin = 50%, then discount = 50%)
- Convert excess inventory or unused capacity into tangible assets.
The goal of business today is to keep as much cash in the bank as possible – not in the hands of vendors. Cash flow shrinks or expands from year to year, depending on two things: Gross Sales Generated and Monitoring of Expenses.
By treating Tradebank as an alternate expense account, companies use the 7-15% extra business to pay for existing expenses, not their cost of goods sold. By paying trade dollars for these expenses the company’s cash remains in the bank – UNSPENT – improving both cash flow and profitability!