You are the owner / operator of Mt. Sterling Drug Company, a pharmaceutical wholesaler. In response to Mt. Sterling's 'cash only' sales terms, competitors have attempted to lure business away by offering various incentives. Among these are credit terms whereby a customer typically has 30 to 60 days to pay a purchase and receives a 1 to 2% discount for prompt payment (usually within 10 days of sale).

• Which is worse, the potential for bad debts that come with offering credit or the lost business from not offering credit? Why?