Company computerizes barter technology to allow tens of thousands of small companies to barter goods and services.
Bank loans and venture capital are hard to get for many companies. So it shouldn't be a surprise that businesses trying to run more efficiently -- and hold on to their cash -- are turning increasingly to barter.
On local or regional barter exchanges, companies can offer their products or services (at whatever price they normally charge) and swap them for goods or services provided by other exchange members. (See "Bartering Instead of Buying," Banking & Capital, May 1991, [Article link].) And if a company can't find anything it needs immediately on the exchange, it gets trade credits.
But this spring Dallas-based Advanced Artificial Intelligence Systems hopes to take barter technology into the next orbit. With the help of UltraTrade, elaborate software that runs on mainframe computers, the company will enable tens of thousands of small companies in a given region to settle complex trades of goods and services -- simultaneously.
For starters, the company is concentrating on three test markets: Orange County, Calif.; Denver; and Dallas. But CEO Jim Olsen intends to add several other areas by the end of 1993. Here's how the new service will work:
Supply-and-demand information. Every company in the network will be asked to fill out forms with specific information about the products and services it can provide and those it needs -- including, where applicable, prices and catalog numbers and standard-industrial-classification (SIC) codes. That data will be fed into the computer for a preliminary reading on supply versus demand.
Veto power. Before any deals are carried out, companies will get printouts on potential transactions, complete with names of vendors and product descriptions. In response to the printout, a company can ask for further information, notes Olsen, and it "has total veto power over whether a supplier or the goods or services are suitable."
What it costs. Unlike many barter exchanges that require up-front membership fees, Advanced Artificial Intelligence will charge small companies a 10% commission on the volume of new business they generate through UltraTrade. But that's not bad for incremental business, says Fred Gerhart, president of Impact Corporate Communications, in Ventura, Calif., who plans to try UltraTrade in Orange County. "I pay commissioned salespeople 8% to 10%, and that's before the ancillary costs." -- Bruce G. Posner