The practice of barter system dates back to the primitive era of finance. However, the practice is still prevalent in different forms. Bartering, today, is more than swapping of goods and services. It has now become an excellent financing technique for mid sized to large sized companies.
How does the concept work?
All excess capacity like the hotel rooms, rental cars, airline seats and even a producer’s unutilized manufacturing line can be securitized. The securitization process is similar to that of mortgage receivables or credit card receivables securitization concepts.
For example, a rail-road service that might require tons of hardware and software to run their computer systems can barter their requirement with a software-hardware company in exchange for providing an equivalent value of rail-road travel arrangement on board their services.
Thus companies and individuals, who have got a negative impact of their credit history in their present day financing scenario, can use the barter information concept effectively to satisfy their financing needs.
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