Corporate trading

from Wikipedia, the free encyclopedia

Corporate trading is a financial solution for avoiding balance sheet devaluations in which corporate trading providers buy and sell goods and services on their own account. Typically, a corporate trading provider takes over goods threatened by depreciation from their customers and offers them services in return (e.g. the placement of advertising ). The use of cash is also required on the customer side in order to process corporate trading transactions. Thus, corporate trading not limited to the operation of an Exchange or trading platform (as in barter / Bartering), so corporate trading providers are also self-entrepreneurial risks.

Corporate trading should not be confused with trading with companies (company acquisitions and sales) by investors or with capital investment and investment services (securities trading) specifically for companies. Both of these are also sometimes referred to as corporate trading.

Market and Provider

  • Exact market data are not available.
  • It is estimated that seven to ten providers handle 95 percent of the global corporate trading business (Intercapital).
  • Most providers are home to the USA.
  • Providers are for example Active International , Icon International (belongs to the Omnicom Group) and Limmatkontor.

Involved

  • The corporate trading provider forms the link for all corporate trading activities: every transaction or activity runs through the corporate trading provider; there are no direct connections between the other parties involved.
  • Corporate trading customers are usually medium-sized and large companies, often consumer goods manufacturers , for example in the fields of cosmetics, food & beverages, electrical appliances, toys, textiles and household products.
  • The marketing partners take over the distribution of the goods taken over from the customer for the corporate trading provider . To this end, the marketing partners use sales channels to which corporate trading customers have no or only limited access - such as domestic and foreign retail , wholesale , direct sales and internet sales as well as discount campaigns.
  • The service partners are, for example, publishers and TV broadcasters, printers, hotels and forwarding agents. They offer services in the areas of advertising / media, travel, events, hotels, printing, logistics and transport, which corporate trading customers can successively access via the corporate trading provider.

Corporate trading process

Corporate trading providers help companies avoid depreciation of assets by converting those assets into benefits for the company. From the customer's point of view, this essentially takes place in two steps:

Step 1 - Financial solution and marketing of the goods: A corporate trading provider takes over assets from his customers whose market value has fallen sharply and usually pays the full book value for them. Such assets can be stocks from unsuccessful product launches, promotional goods that could not be sold during the promotional period, goods from canceled orders, discontinued goods, or the like.

Step 2 - successive access to services: In the following period, the corporate trading customer receives services from the portfolio of the corporate trading provider - such as advertising capacity, printing, hotel and travel allotments. These are services that the company needs on an ongoing basis. In corporate trading, however, it does not pay the full amount in cash, but uses the previously sold old goods for part of the sum.

Differentiation from bartering

In contrast to bartering, the transactions between the parties involved in corporate trading are completely decoupled from each other. Corporate trading customers can therefore always choose from the complete portfolio of a corporate trading provider when they successively call up the services. In addition, the corporate trading provider assumes entrepreneurial risk himself - this goes beyond providing an exchange platform such as bartering.

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literature

Matthias Kettenburg: Paying through gang . In: Sponsors . Edition November 2012, p. 24–25 (article on financing sponsorship through corporate trading).

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