Barter Industry Note

Babson Professors Julian Lange and Benoit Leleux, Case Directors

Sam Perkins, Case Writer

Arthur M. Blank Center for Entrepreneurship

© Babson College, 2000.

Abstract

Barter is an ancient method of exchanging goods and/or services without using currency. In recent centuries, barter has been primarily practiced at the retail level between individuals and/or small companies. Since the 1970's, corporate barter (also referred to as trade finance) has become very successful with industry estimates of almost $10 billion in 1997.

The most basic barter transaction is a direct exchange of goods or services between two entities. More complex transactions that barter companies have developed include: the exchange of trade credits for under performing assets, remarketing of merchandise and the retirement of the trade credits for goods and services. This note also discusses accounting issues concerned with barter including GAAP guidelines.

Note: This industry note can be used with the Babson case Active International, the largest barter company in the world.

Location of the company: N/A

Years spanned by the case: N/A

Industry segments: Barter

Stage of the company: N/A

Age of the entrepreneurs: N/A

Key Words: Entrepreneurship, barter, trade credits

DVD

There is no DVD available for this case.

Teaching Notes

A nine page case teaching package, written by Julian Lange, is available for this case. Included are seven pages of figures, suitable for reproduction, which show various types of barter transactions.