Using Trade Credit strategically in your business

Posted by Scott Miles on Oct 25, 2012 4:00:00 PM

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 Your business has entered into a Corporate Trade deal. You have exchanged an underperforming asset, perhaps excess inventory, in return for Trade Credit that can be used with cash to pay for routine budgeted business expenses.

To get the most out of your Corporate Trade deal, here are some best practices to consider:

1) Bring all departments on board: A Corporate Trade deal is a financial solution – enabling the restoration of an asset’s book value where a company may have otherwise realized loss. For this reason, a significant number of Corporate Trade or barter deals may originate with procurement, supply chain or finance. Yet, Trade Credit usage is what delivers value. Anyone involved in the actual redemption of your Trade Credit – primarily marketing folks - should be aligned with all other departments in regard to the internal objectives of the deal. Ideally, leadership of each department should ensure that the necessary steps needed to achieve these objectives are communicated down the chain. It’s important that the parties involved with using the Trade Credit understand the financial benefit and receive incentives to drive it.

2) Incentives accelerate Trade Credit usage: Even if every department within a company understands the financial benefit of using Trade Credit, sometimes a little nudge is helpful. Placing incentives behind credit usage can produce great results. For example, given the bottom line benefit of Trade Credit redemption, one customer felt justified in giving an incentive to the person who managed acceleration of credits internally. Incentives don’t have to be centralized or financial. In fact, it is just as effective to connect incentives to pre-existing company activities. One idea is creating an internal rewards and recognition program, where “rewards points” are given to marketing and brand managers with the highest Trade Credit usage rates.

3) Always involve your media agency: There is a reason that corporate barter and trade specialists like Active International work without taking a media fee. While we do employ experienced media professionals, as a company that offers a financial solution our primary value proposition is not in the planning of your media campaigns. Rather, our value is in the ability to allow you to fund a portion of those campaigns with your Trade Credits. The agency is a key partner when it comes to Corporate Trade. Working hand-in-hand with your Corporate Trade specialist, the agency is your media guru who ensures that the campaigns are tied to your strategic goals. Your Corporate Trade partner works with your agency on the purchase of media.

4) Think global: If your company operates globally, consider the possibility of transferring a portion of your Trade Credits to other offices for redemption in international markets. Corporate Trade companies like Active International have operations in 14 countries around the globe, and routinely facilitate this kind of arrangement as part of a given trade deal.

5) Consider every expense a potential opportunity for Trade Credit redemption: Strong Trade Credit usage drives the success of a Corporate Trade.  A Client Solutions Manager (that’s me!) is your point person, designated to work closely with your agency and all relevant parties on your business to ensure that your Trade Credits are redeemed in an efficient and seamless fashion. Never hesitate to ask your Corporate Trade partner whether you can apply Trade Credits to an upcoming expense

Your turn: What best practices have you used to implement a Corporate Trade deal in your organization?

Topics: Corporate Trade Industry Report, Cost Management


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