It's smarter to barter. That's Henry Folley's view.

He owns the Wedding Centre in Marlow - a one-stop-shop for anything to do with weddings.

It's a seasonal business. Most people get married in the summer.

That means cashflow can be a problem in winter, when there's less money coming in but there are still bills to pay.

Henry's solution is to save his cash, and barter for the services he needs.

Smarter to barter

Henry belongs to a business-to-business trading scheme called Bartercard.

There are more than 2,000 businesses in the Bartercard scheme.

They are all listed in a book a bit like the Yellow Pages.

Trade pounds

Here is how it works.

If Henry needs to get some new brochures printed, he contacts a printer who is a member of Bartercard to do the work.

Henry has bartered for mobile phones, printing and web design

The cost of the work is then charged against his Bartercard - a bit like a credit card.

The printer's Bartercard will then be credited with the cost of the job in barterpoints - or trade pounds as they are known.

The printer can spend these trade pounds on services from any other Bartercard member.

Almost anything

"I've had everything on Bartercard," says Henry: "Mobile phones, website design, my wedding cars serviced and advertising."

Mobile phones and stationery are services regularly required by businesses.

But not everyone wants a wedding dress each month.

So how can businesses like Henry's attract companies to clear their Bartercard balance?

Clearing debt

The pressure is on the company behind Bartercard to bring businesses together. And so far it's worked for Henry.

Some products can be harder to barter than others

"To save their cashflow, people will travel further. I've had customers come to me from the likes of Portsmouth."

Bruce Bradley is another barterer. He runs Aspen Graphics - a company that Henry uses for his brochures.

"I'd say that over the last three-and-a-half years, bartering has increased my turnover by 25%. And increased my profitability by between five and six per cent," he says.

Charges

But Bartercard isn't free.

It costs just under �1,000 to join. There's a 5.5% charge on each transaction that is paid in real pounds, and a 1% charge paid on transactions made in trade pounds.

On top of that there is a monthly administration fee of �12.50 a month in cash and �12.50 in trade pounds.

Bruce thinks it's worth it.

Protection

One of the reasons is the protection it affords. Even if the businesses he is dealing with go out of business, Bruce still gets paid for his work.

Why? Well as soon as a deal is agreed between two Bartercard members, and the transaction is authorised by Bartercard, trade pounds are credited or debited onto their cards.

This means that if one of Bruce's clients gets into financial difficulty before settling their bill, he will still be paid - in Bartercard credit.

"In the real world, if a customer goes out of business you'd get nothing," says Bruce.

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Student guide

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Most people want to pick a beautiful sunny day to get married so Henry Folley of the Wedding Centre finds business is a bit slack in the winter.

This doesn't stop the bills coming in.

Even if there aren't many customers, the centre must remain open, staff must be employed and marketing must continue.

Winter is his prime time for getting the new catalogue out.

This is inevitably a big expenditure.

Brides want to see a glossy image of everything that helps to make the big day special.

Cars and clothes

Then there are maintenance costs.

The summer season can be long, so he must make sure that everything that is hired out, from cars to clothes are all in the peak of condition.

There may be new cars to buy. Clothes need to be updated to fit the fashion. This all happens in the winter.

So winter isn't cheap.

Just think...

Draw up a cash flow diagram, using words instead of numbers to show how Henry's cash might flow through the year.

If the peaks and troughs in his cash flow get too dramatic, what might happen to the Wedding Centre?

Why barter?

Henry provides all sorts of wedding products and services as well as general party goods.

If he just did a straight exchange of items he has for sale with other businesses that sold things he wanted, it would save cash and help his cash flow.

The problem is - he would have to find a printer, a car dealer or a supplier of party products who wanted to get married!

Why Bartercard?

Barter card makes barter a much more viable way of working.

Instead of doing a direct swap, Henry can buy from any member of the Bartercard club.

They are all listed in the directory.

How does it work?

When Henry gets the catalogue printed, he pays with trade pounds.

These register in his account as a debt until someone wants something from him. This means the printer doesn't have to get married in order to clear the debt.

If another member of the club plans a wedding, they may spend 10,000 trade pounds with Henry, on dresses, cars, and all the other accessories.

The money goes into Henry's Bartercard account.

Getting cash

Henry is then left with a surplus of �5000 trade pounds in his account at Bartercard, which he can use with any other business in the directory. Henry now has his catalogue but no cash left in his account.

As summer approaches business picks up.

People want to get married again and customers begin to walk through the door. The cash starts flowing in.

Just think...

How has Bartercard helped Henry's cash flow?

Chose a business that you know and work out how Bartercard might help it.

Above board?

You might think that bartering is a good way to avoid the taxman because no money changes hands but Bartercard is honest and legal.

Every time a transaction takes place VAT is added and it's recorded in the accounts just like any other sale or purchase.

Henry wouldn't be on Working Lunch if he were on the fiddle!