Fred Jones is opening an electrical supply store in River City. He plans to sell electrical parts to both wholesale and retail customers. Since contractors (wholesale customers) prefer to charge parts and materials and pay at the end of the month, Fred expects he will need to offer charge accounts. He plans to offer charge sales to the wholesale customers only and to require the retail customers to pay with either cash or credit cards. Fred wondered what expenses his business would incur relative to the charge sales and the credit cards.

Please discuss what issues Fred will need to consider if he allows wholesale customers to buy electrical supplies on account versus the issues that could arise by requiring the retail customers to pay using cash or credit cards.