TRADE CREDITS

Complementary Currency 

When members conduct a transaction in the GETS Trade B2B Marketplace they use a digital unit of account known as Trade Credits or Trade Dollars AKA complementary currency  this currency is an Enterprise-backed Trade Credit Obligation (TCO), which is based on a financial architecture known as a Peer-to-Peer Mutual Credit Clearing System. In the case of the GETS Trade capacity exchange system it is a closed loop system where the Trade Credits are backed by Local Businesses similar to the Swiss Wir Bank.

WIR, ​The Worlds Oldest Complementary Currency

The WIR Bank Complementary Currency system has proven to be a stable financial economic system since 1934 when it was implemented by the very successful WIR Bank of Switzerland, www.wir.ch which now supports nearly 20% (62,000) of Swiss SMEs trading $6.5 billion as of 2005 of commerce annually  The WIR Bank's currency code is CHW as designated by ISO 4217 https://en.wikipedia.org/wiki/WIR_Bank. 

Characteristics of getslocal. Trade Credits 

• ➤
  GETS Trade is a Business to Business (AKA Peer2Peer) Mutual Credit Clearing System that uses a internal accounting unit called Trade Credits.
• ➤
  The GETS Trade "Trade Credit" is backed by the obligation of the members to provide goods or services.
• ➤
• ➤
  GETS Trade acts as a third-party record keeper and does NOT issue Trade Credits NOR create the Trade Credits GETS Trade only ISSUE “lines of credit” to members.
• ➤
  Trade Credit account balances and transactional records are maintained by GETS Trade.
• ➤
  Trade Credits are created and put into circulation when a Partner or Premium Member member makes purchases before generating any sales from another member and their account balance goes into the negative.
• ➤
  Members with the 0% (interest-free) line of credit are approved by GETS Trade.
• ➤
  This process enables members to buy goods or services before they have made any sales.
• ➤
  It is the members themselves that create and guarantee the Trade Credit obligations not GETS Trade.
• ➤
  GETS Trade is not liable for the negative balances, the liability is collectively held by the members.
• ➤
  Trade Credit accounts are provided to all members as an intermediary device to enable transactions to take place.
• ➤
  When you sell something, your Trade Credit balance is credited (increased) and when your account is in a positive balance the system owes you.
• ➤
  When you buy something, your Trade Credit balance is debited (decreased) and when your account is in negative balance you have an obligation to the system.
• ➤
  GETS Trade system is always 100% fully balanced this is where all the credit and debit balances will equal (0) zero and assets may not leave the community – if one member is in debit (negative) there is always one or more members whose accounts are in credit (positive) to the same amount.
• ➤
  The Trade Credit means ultimately, members goods and services pay for other members goods and services.
• ➤
  Trade Credit is the main unit of accounting and the trading currency used by GETS Trade and our trading partners worldwide.
• ➤
  The Trade Credit is how the value of a sale is transferred from the BUYER’S account to the SELLER’S account.

The Trade Credit is: 

• ➤
  Subject to VAT
• ➤
  Subject to all taxes
• ➤
  Entered into company accounts the same as a sale or purchase
• ➤
  A local and international currency
• ➤
  Is pegged to £1.00 in the UK and to the $1.00 Dollar in the USA
• ➤
  Can be borrowed interest free* - goods and services only
• ➤
  Can be paid as dividends, bonuses or salary
• ➤
  Can be used to purchase Premium Points

*Subject to application and review by getslocal

Mechanics of the Trade Credit

Trade Credit transactions:  

• ➤
  Invoiced - as cash
• ➤
  TAX - payable in cash
• ➤
  Payment - guaranteed**
• ➤
  Account entries -same as cash
• ➤
  Payment method - Trade Credits
• ➤
  Terms of payment - in advance
• ➤
  Warranties and guarantees - between two parties as in cash transactions
• ➤
  Medium of exchange/payment - Online Electronic Transfer
• ➤
  Loans - 0% interest, with repayment terms in extra sales, subject to approval.

RECORD KEEPING AND TRACKING

Accounting for Trade Credit Transactions

In accordance with General Accepted Accounting Principles (GAAP), members must record all transactions at fair market value.
The member creates an additional bank account in their General Ledger to record all trade credit transactions.
Similar to a cash sale, when a sale occurs, the revenue account is credited and the trade credit account is debited.
When purchases occur, the asset, or expense, account is debited and the trade credit account is credited. The trade credit account will equal the balance of your The GETs Trade statement at the end of the month.