Q: Our sales have been slow for the past three months, and I'm worried that we won't have the cash we need to keep our home based catering business afloat. Any ideas?

A: If you don't have the money to pay your suppliers, ask whether they'll consider a barter deal instead. Barter, a noncash exchange of goods and services that dates back to the dawn of human existence, has seen a resurgence among cash-strapped small businesses that lack the cash or credit to pay for the supplies, advertising and other products and services they need to survive.

As a catering business that can offer food preparation and hospitality services, your company is in an excellent position to barter with a wide range of vendors--radio stations that sell the ad spots you need to attract new customers, attorneys and accountants who may be willing to swap their professional advice for help throwing parties and creating gift baskets, even a web designer who's willing to host or update your site. Thanks to the internet, barter deals can be done online through exchanges such as International Monetary Systems and Itex, which promise to help you conserve cash and boost sales by letting members trade their excess inventory at full value to purchase computer equipment, T-shirts, caps, phones, printing services and even restaurant meals.

But barter has its limitations. Just about every landlord still wants his monthly rent in old-fashioned greenbacks--and your local utility probably won't let you use cupcakes to pay the electric bill. There are also tax consequences to consider. Michael Goldberg, a CPA from Scarsdale, N.Y., who advises small and midsize businesses on tax planning and compliance, says it's important to remember that barter transactions are considered sales and must be reported to the IRS on your federal tax return.

While it may be possible (though not legal) to barter your services with the company next door and not report it, you can't get away with it when doing business through barter exchanges on the internet. "Barter clubs credit or debit members' accounts based on goods and services provided and purchased," Goldberg says, noting that most club members will get an IRS form 1099-B from the exchange showing the value of the credits to their account.

However, debits to members' accounts can be tax-deductible if they are spent in connection with a trade or business. "IRS looks closely at barter transactions to confirm that they are reported properly," Goldberg says. "A standard preliminary question in an IRS audit is whether there have been any barter transactions."