Offering credit or lost business from not offering credit

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Reference no: EM133615285

Question

The client, Bob Roik, is the owner of Roik's River Bait Shop, an all-inclusive commercial fishing retailer. Currently, the terms of his sale are "cash only", but several of his competitors are accepting credit cards. Preliminary research showed: The most popular credit card accepted by Roik's competition is VB. VB charges 1.55% on each transaction (a $100 transaction would result in a VB service charge expense is $1.55 and you receive $98.45). Some of Roik's competitors are using advance payment sales, where the customers are offered credit terms, where they have 60 days to pay with a 2% discount if payment is received within 15 days of the sale. Based on the scenario, Which is worse, the potential bad debts that come with offering credit or the lost business from not offering credit? Justify your opinion.

Reference no: EM133615285

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