What is Barter? How Does the Barter System Work?

This shopping is carried out in common markets where companies participate. In this way, target audiences are expanded and new customers are gained. In short, it is a highly advantageous system for both making a profit and raw meeting various needs.

In this article, we will seek answers to the questions of what is the barter system, which is the direct exchange of goods or services without using money, and how does it work. 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 ordinary exchange transactions that come to mind. Because it has a highly developed system. Within the scope of this system, it is evaluated as a shopping club utilized by institutions or individuals who have certain qualifications to find markets under the best conditions and to ensure that shopping is done in these markets.

In the barter system, a company or person pays the price of the services and goods they purchase with the 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. That is, buyers and sellers generally do not come together. The popularization 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. 

The working principle of the barter system is that the services or products purchased by companies are repaid 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 market place where seller and buyer 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 specific rules and criteria.

How to Make Barter Payment?

With the barter system, which has been used in Turkey since the beginning of the 1990s, the field of activity of more than 100 barter companies has expanded, especially in recent years. In this context, the ways followed to make a barter payment are as follows:

• According to the barter system implemented in Turkey, the companies in question meet 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 aware 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 consultancy services in order for companies to sell their products or meet various needs.

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

What are the Advantages of the Barter System?

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

• Being a large market on its own, this system allows companies to both liquidate their stocks and convert their idle capacity into sales with different methods.

• The system contributes to cash savings of companies.

• Thanks to the barter common market, the indebted company can market its stock products in the first place and make repayments during this process. In this sense, both stock costs are reduced/ended and turnover increases. In addition, a significant profit is obtained.

• Thanks to the common market, new customers and target audience are gained.

• Companies can perform promotion and advertising free of charge for about a year.

• The collection period is shortened, in this context, the companies that make sales make instant collection by purchasing different services and goods previously offered to the system. 

Why Use the Barter System?

The main reason for using this system is that companies save cash to the extent they use the system and minimize their need for working capital. Companies operating in the common market also get the chance to evaluate their capacity in order to meet reliable and regular demands from this market.

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

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, some provisions of Turkish Commercial Code, Turkish Code of Obligations or Turkish Civil Code are valid if appropriate.