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Business Exchange International of Alaska.

The barter business is booming, and Jerry Kemnitz brought the boom to Alaska when he opened a regional office of the Los Angeles-based Business Exchange International Inc. in March. As Area Broker of the state, Kemnitz has built a network of about 100 businesses in Alaska, mostly in Anchorage, the Mat-Su Valley and Fairbanks, which sell goods among themselves and with 31,000 other BXI members across the U.S. and in several other countries. He plans to open satellite offices in Fairbanks, Juneau and Soldotna in 1993.

"There are over 600 trade exchanges out there," Kemnitz says, "but BXI is the oldest and largest, and quite frankly, the best organized."

With cash-conscious businesses trying to cope with a lackluster economy, industry analysts say traders will exchange more than $6 billion in goods and services this year, earning buying power while keeping their money on hand. The volume of trade increased at an average of 8 percent through the 80s, then jumped to 12 percent growth in both 1990 and 1991.

Barter is a boon to business. Much of the high volume in barter is carried on by large corporations, including companies such as Pepsi, which trades its syrup in Russia for vodka rather than the questionable ruble. In 1990, McDonnell-Douglas traded $16 million in excess nuts and bolts at full value -- avoiding a liquidator's offer of three cents on the dollar -- for barter credits.

More than one-quarter million small businesses have joined barter exchanges, which handle transactions by tallying credit within their network. They're attracted by increased sales to cash-strapped buyers, full-price sales of excess inventory, and relief from the dilemma of paying bills or buying supplies next month. They buy some of their supplies with barter credits, saving cash for bills.

"We're bringing a business new customers -- we're helping them to lower their cash outlay expenses, and we're actually promoting their business for them," Kemnitz says.

In a one-on-one trade, if they could find one, traders likely would wage a lengthy haggling session over their products' relative worth. But BXI members agree to sell to other members at 100 percent retail, and receive credit they can spend with any BXI member, anywhere.

There are built-in protections and flexibility to membership agreements because, as Kemnitz says, "We're here to keep you in business -- we don't want you to wind up selling the farm." There's a barter credit ceiling of $1,500 on each transaction, above which the buyer and seller can negotiate cash or trade terms. A member with $5,000 in credits on account can put barter sales on hold until the earnings are spent.

But before a member's balance reaches that ceiling, Kemnitz says he'll step in to help the member benefit from barter. While all businesses receive a directory of members' services, Kemnitz can act as procurement agent to fine-tune their purchases.

As a trading consultant to his member businesses, Kemnitz can even find goods and services from outside the network for them by contacting a non-member business for a desired product and using the buyer's trade credits to find the outsider a product to take in trade.

The cost for Kemnitz' role in the transaction is a 10 percent commission on sales -- a standard in the barter industry. Other costs are a one-time, $595 membership fee, negotiable in cash and BXI credits, and an annual accounting fee to cover the costs of monthly BXI bank statements.

"Business Exchange International is a bank," Kemnitz says. "It's an alternative banking system dealing in debits and credits."

For more information, contact: Business Exchange International of Alaska Jerry Kemnitz, Area Broker Phone: (800) 770-2925 Fax: (907) 337-3595
COPYRIGHT 1993 Alaska Business Publishing Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Business Exchange International Inc.
Publication:Alaska Business Monthly
Article Type:Company Profile
Date:Jan 1, 1993
Words:608
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