Barter is the exchange of goods or services for other goods or services. It is a buy-sell arrangement where cash is not used as the intermediary. For example, a sign company may do vehicle graphics work for a radio station in exchange for radio advertising time.

This page describes how an approach to handling barter within Cyrious Control. The approach described here is the fullest implementation, but requires the Accounting Module for Control.

**A Note On Sales Tax**: Just because a transaction is non-cash does not exempt it from sales taxes. In most (all?) states, you are responsible for paying sales tax on barter transactions as if it were a cash transaction. The approach laid out here does not alter the normal sales taxes you would owe. If you are unsure of the tax law for your state, consult a local CPA.

Concept

The basic approach used here is to realize that a barter transaction is equivalent to a Customer Credit being applied to the order and a Vendor Credit being applied to the bill.

Steps

  1. Enter the Order as you normally would, for the Customer/Vendor.
  2. Enter the Bill as you normally would, using the same Customer/Vendor.
  3. Open the Customer/Vendor record.
  4. Give the customer a customer credit.
    • Click on the Financial tab.
    • Click on the Credit Balance button. (If you don't see the credit button, make sure you are not in Edit mode. You can't give a credit while you are editing the customer.)
    • Click Increase By and enter the amount of the barter.
    • Type in a reason. This will be used in the logs, so put something that will help you understand the meaning when you look back in 6-12 months.
    • Click OK.
  5. Give the customer a vendor credit.
    • Click on the Vendor tab.
    • Click on the Credit with Vendor button. (If you don't see the credit button, make sure you are not in Edit mode. You can't give a credit while you are editing the vendor.)
    • Click Increase By and enter the amount of the barter.
    • Choose the Credit Given account as the Expense or Income Account to Offset. This account is automatically used by the customer credit, so selecting it here will result in that expense being negated.
    • Type in a reason. This will be used in the logs, so put something that will help you understand the meaning when you look back in 6-12 months.
    • Click OK.
  6. Apply the credit to the order.
  7. Apply the credit to the bill.

Example

Radio Staion WYMB wants to barter commercial air time in exchange for wrapping their new van. You quote the job at $3,500. Initially, they are going to air 7 commercials a week for a month at a value of $2,100 and let you use the rest later. Sales tax is 10%.

To use this:

  1. Create the order (convert the estimate if you have one) for WYMB for $3,500, plus $350 tax.
  2. Enter the bill from WYMB for $2,100.
  3. Open WYMB's record.
  4. Give WYMB $3,850 in credit. (Don't forget the taxes.)
  5. Give yourself $3,850 in vendor credit with WYMB. Make sure you take the credit from the “Credit Given” account.
  6. Open the order and click on the “Payments/Deposit” button on the Payments tab. A payment window will open for the order. Select the Customer Credit payment option and pay the entire $3,850 bill.
  7. Open the bill and click on the “Deposits/Payments” button on the Items tab. A payment window will open for the bill. Enter the amount in the “Credit Applied” field and pay the entire $2,100 bill.

At the end of this example, you will still have a vendor credit on file for $1,750 ( = $3,850 - $2,100 ) you can use on subsequent bills.

Source

Contributor: Cyrious Software

Date: 03/2010

Version: Control 4.0+

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