Bartering: food for thought with value creation

Wall Street Journal’s Raymund Flandez reports on businesses beating the recession through barter.

In return, Bureau Blank is helping Mr. Hunt shape his company’s communications strategy, as well as designing the company’s logo and Web site.

“It’s a result of the economy being a lot tougher now,” says Mr. Blank, who estimates the traded work amounts to about $10,000 worth of services.

He adds: “I wouldn’t have done the project if I had to pay the cash.”…

Atlanta Refrigeration Service Co. worked out a deal with a local sandwich shop that was 90 days overdue on a $1,500 bill: The sandwich shop paid $500 and agreed to cater lunch to Atlanta Refrigeration’s office five times over the next six months.

Bartering is “critical to us in this recession,” says Dave Brautigan, chief operating officer of the Atlanta-based refrigeration company. “As more and more of our clients find themselves in positions where they cannot pay the bill in full, it becomes our responsibility to figure out how to get that money in.”

What does the GDP tell us about these transactions? They are bad for business. Transactions that are not paid in cash won’t be reflected in statistical measures, for the same reason that favors and work done in the household are not counted. Value creation analysis gives a much better measure of the role that barter transactions play in the economic recovery–transactions that won’t be counted when economic historians assess the timing of the recovery.