With the 4thquarter approaching for those companies on a calendar fiscal, financial executives are looking closely at the balance sheet to review inventory turnover. And if you’re in sales or marketing, many executives are looking closely at whether or not they will hit their forecasts. If results aren’t where they should be, one contributing factor could be excess or obsolete stock.
The big question is how to offload this excess without taking a loss? Historically, to avoid a complete write-off on inventory, it has been liquidated. However, margins suffer (often to the tune of a third of the asset’s original value for most organizations).
It’s no wonder many Fortune 1000 companies have embraced Corporate Trade as a strategic tool to maximize value on underperforming assets. Corporate Trade businesses, such as Active International in Canada, can offer up to three times the cash value that excess stock is worth on the open market.
With Corporate Trade (also referred to as Corporate Barter) the excess inventory is paid for in Trade Credits which can be spent by businesses on things like media campaigns - anything from television and digital advertising, as well as on conferences, events and corporate hospitality. This approach allows organizations to hit their inventory sales forecast for the year ahead and helps them to perform well in tough trading conditions.
Here are some tips for working with corporate trading organizations:
- Experience is key - only deal with reputable, established Trade companies who have financial stability and wide breadth of trading relationships. This ensures that your company can get the full value of the Trade Credits, which is how you realize the value. Ask your Corporate Trade firm for Canadian customer references and case studies.
- Local representation, global reach - if your business operates worldwide, partner with a Corporate Trade company with similar reach. You’ll be able to generate extra value for your media spend in the countries in which you operate. However, it’s important that your Corporate Trade firm also has a local presence, not only to better serve you, but to develop sustainable trade relationships with local media providers and other vendors.
- Independent from agency-ownership – the value of a Corporate Trade transaction is only realized once Trade Credits are spent, and only if the credits lower the cash outlay on rates you would have otherwise paid. For example, if you wish to spend your Trade Credits on media advertising, and you select a Corporate Barter company owned by a large media buying agency, there is potential conflict of interest. The company setting your media rates is also the company telling you how much of a discount you’ll receive. Independent Corporate Trade firms such as Active International, working alongside your media agency of record, act as the necessary check and balance to ensure you’re receiving dollar for dollar value. The agency sets the rates as they always do, Active applies your Trade Credits against them.
- Approved resellers - it’s vital that a business sells excess inventory to approved buyers, otherwise they risk brand integrity. Ensure your Corporate Trade partner has the necessary buyer relationships in place and that you sign off on final placement.
- Reporting - always ask about reporting procedures before making a deal. You want to ensure you are doing business with a Corporate Barter company who can provide you with regular reporting on your Trade Credit usage. See also Accounting for Trade Credits.
As an industry, Corporate Trade has grown enormously in recent years. It is becoming more and more commonplace for financial, sales and marketing professionals to include it in their forecasting – rather than as a last resort. Corporate Trade really is a smart business solution for finance, sales and marketing professionals looking to hit their numbers without sacrificing margins.
For additional tips about using Corporate Trade for your underperforming assets, check out Top 6 Myths About Corporate Trade.
Your Turn: Have you used Corporate Trade as a tool to hit your year-end numbers? Tell us about it.