What is Barter? How Does the Barter System Work?

The barter system, which has been used by many companies across Turkey for years, ensures that buyers and sellers come together seamlessly. At the same time, it plays a very important role in helping buyers and sellers carry out exchange transactions. In other words, most companies working in partnership with barter companies sell their products to meet their needs.

This exchange is conducted in common markets where companies participate. In this way, target audiences are expanded and new customers are acquired. In short, it is a highly advantageous system both for generating profit and for meeting various needs.

In this article, we will seek answers to the questions of what the barter system is—which is the direct exchange of goods or services without using money—and how it works. At the same time, we will examine in detail what you can do with this system. Understanding the opportunities and dynamics offered by the barter system allows you to open new doors in trade. Here is everything you need to know about the barter system! 👇🥳

What is Barter?

Barter, which literally means 'exchange', is different from the ordinary exchange processes that come to mind. This is because it has a highly developed system. Under this system, it is considered a shopping club utilized by institutions or individuals with specific qualifications to find markets under the best conditions and to ensure that transactions are carried out in these markets.

In the barter system, a company or person pays for the services and goods they purchase with services and goods of their own production. In short, in exchange for the services and goods owned, the services and goods that have become a need are purchased.

Barter companies are responsible for all of these transactions. This means that buyers and sellers usually do not meet. The popularity process of the barter system begins with the increase of economic crises experienced in countries. In other words, the cash shortage experienced in the market can be a trigger in this sense. Exchange transactions can start in areas where cash shortages are experienced.

How Does the Barter System Work?

The working principle of the barter system is that companies pay back the services or products they buy with the services or products they produce. Here, a service or product sold is intended to meet another need.

Barter companies act as intermediaries in this large marketplace where the buyer and seller easily come together. Within the scope of this system, which acts as a unifier, the rights and responsibilities of the parties are determined along with certain rules and criteria.

How is Barter Payment Made?

With the barter system used in Turkey since the early 1990s, the field of activity of more than 100 barter companies has expanded, especially in recent years. In this context, the steps followed to make barter payments are as follows:

• According to the barter system applied in Turkey, the companies in question come together in a common barter pool.

• These companies report their specific demands and the products they want to supply to contracted barter companies.

• Companies, which are informed of each other's supply and demand through the Barter Information Bank, can exchange their products and services among themselves without using cash.

• In this context, the role of barter companies is to provide consulting so that companies can sell their products or meet various needs.

• The system, which does not have a wide target audience across Turkey, can be applied more in domestic trade than in foreign trade.

What are the Advantages of the Barter System?

One of the biggest advantages of the barter system is that it offers shopping opportunities without the need to use cash. In addition, the general advantages of the system are as follows:

• This system, which is a major market on its own, allows companies to both liquidate their stocks and convert their idle capacity into sales through different methods.

• The system contributes to companies saving cash.

• Thanks to the barter common market, the indebted company can place its stock products on the market in the first stage and make repayments during this process. In this sense, stock costs are both reduced/eliminated, and turnover increases. In addition, significant profits are made.

• Thanks to the common market, new customers and target audiences are acquired.

• Companies can advertise and promote themselves free of charge for about a year.

• The collection period is shortened; in this context, companies that have made their sales instantly realize collections by taking different services and goods previously supplied to the system.

Why is the Barter System Used?

The biggest reason for using this system is that companies save cash to the extent they use the system and minimize their needs for working capital. Companies in the common market also get the chance to utilize their capacity to meet the reliable and regular demands coming from this market.

Companies that make sales using the barter system are considered creditors up to the value of the products sold. Therefore, they can collect this receivable by purchasing services and products from the system. 

The Barter System in Turkish Law

There is no specific regulation or law regarding the barter system in Turkish Law. For this reason, in case of illegalities or disputes that may arise in the barter contract, certain provisions of the Turkish Commercial Code, the Turkish Code of Obligations, or the Turkish Civil Code apply, provided they are appropriate.