You have a sole proprietorship merchandising business

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You have a sole-proprietorship merchandising business dealing with photography equipments. The business was established three years back, and it had an average annual turnover of $50,000. However, over the last six months, the monthly sales have fallen considerably. To reverse this downward slide, you are considering selling the products on a credit basis of 15 days to all your regular customers. There are approximately 25 -30 such customers. In turn, you also plan to ask your vendors to increase the credit period from 15 days to 25 days for all payments. Is buying or selling the products on credit basis a good decision?

1. The business is struggling. What if your customers do not pay? Won't you still be liable to your suppliers? Would you give all your customers credit, or would you qualify them somehow as to their credit risk?

2. How will you qualify the customers as to whether or not they are a good credit risk?

3. What would you do to determine why the business was lost? Was it competition? Was it better product? Location? Prices?

Reference no: EM1333125

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