Local Company Strikes Big South African Deal
Local Company Strikes Deal to Provide $30 million Dollars of Trade Credit Financing to South Africa
New Zealand, 19th December 2005
Auckland-based XO Limited (www.barter-software.com), the worlds- largest developer of solutions for the barter and counter-trade industry, announced today that it had formed a strategic alliance with Access Capacity Traders of South Africa. Under the agreement XO will provide a forecast $30 million dollars in cash equivalent trade credits for the 2006 year with the funds earmarked to be used in reducing the cash purchasing requirements of businesses in the region.
As part of the deal, due to come into effect at the end of January, Access Capacity Traders will take on XO's "Ozone" brand name and begin offering interest free lines of credit to businesses to help reduce cash their borrowing. The agreement allows the users of these trade credit facilities to acquire a range of goods and services from Africa, Asia and Australasia without the need for cash, and have the loans repaid through additional business that will be brought to them by XO and its international franchisees.
"As the cost to generate additional business is significantly less than repaying the initial loan (plus accrued interest) it makes sense for these businesses to use trade credits for funding rather than cash" says Ken Prentice, Managing Director of Access Capacity Traders.
"By offering them trade credit overdraft facilities combined with the ability to sell their excess inventory or capacity, businesses can increase their overall revenue streams whilst reducing their cash costs" says My Prentice. "It is especially useful during periods where cash is tight but production or service capacity is under- utilised as it allows them to spend trade credits on items (that they would usually purchase using cash) and then repay this facility through new business which other members of the network will bring to them." Once a business becomes a member of Ozone and is extended a line trade credits. These credits can be used to purchase goods or services from any member of the network of users of the XO system internationally (currently numbering around 6,000 businesses). The business then repays these trade credits through other members of the Ozone network spending trade credits with them. Typically a business will offer up its surplus product or services to earn trade credits, allowing them to keep their cash for goods or services that are not available through the Ozone network. There are is no interest attracted from the use of trade credits and there is only a nominal fee to use the facility (between 2.5% and 4.5% of the transaction value).
XO operates a sophisticated computerized trade credit and barter network which it began developing in 2002. The company has a team of 18 development staff making it the largest developer of solutions for the barter industry world-wide.
In New Zealand XO assists the local Ozone franchise operators to manage a network of over 2,000 businesses. The company has also recently signed a second trade deal with Terry Thng of the newly incorporated "Ozone Singapore" which is due to launch next week.
"Our rapid expansion internationally is really a testament to our great team of developers and systems designers" says Tatiana Soubbotina of XO Limited. "In many ways our systems exceed those of standard banking solution providers as we offer a range of financial tools backed by intelligent software systems incorporating e-commerce market places, EFTPOS services, SMS, Phone and Internet Banking."
The company sees that it has a rosy future and is looking to start providing financial and systems development services to Poland, Canada, the United Kingdom and the United States in the coming months.
According to the North American Barter Association approximately $30 billion dollars in transactions were conducted in 2005 in the United States alone. The US Department of Commerce estimates that between 20% to 25% of all commerce world-wide is barter.