posted by quita .
Paul Smith is opening a plumbing supply store in University City .He plans to sell plumbing parts and material to both wholesale and retail customers. Since contactorors prefer to charge parts and materials and pay at the end of the month, Paul expects he will have to offer charge accounts. He plans to offer charge sale to wholesale customers only and to require retail customers to pay with eighter cash or credit cards. Paul wondered what expenses his business would incur relative to the sales and the credit cards.
I have no idea! I've never taken a business class.
Well I've never taken a business class... but I think it would depend on the sales coming from wholesale or retail. If there was more wholesale, he would have to incur more expenses initially due to the fact that he wouldn't get paid until the end of the month, therefore he'd have to pay more to get more supplies for retail sale, without getting paid beforehand. However this is only initial as he would get paid at the end of the month, so the profit would still be the same ratio.
However if retail sales were more then there wouldn't be much of a problem. Still he'd face the same problem mentioned above, but due to the fact that he gets paid upfront, he'd have the necessary capital to buy more supplies, without having to raise more funds.
Again, never took a business class, but seems to make sense to me.
Also I was a DECA International Competitor... So I know a bit