Preauthorized payments help reduce collection float.

Preauthorized Payments

Automated payments set up to charge a bank account or credit card for recurring bills or subscriptions on a pre-set schedule.

Collection Float

The time period between when a check is deposited in a bank and when the funds are available in the account, impacting cash flow management.

Understand the role and mechanism of preauthorized payments and their impact on collection time.

Verified Answer

Zybrea KnightJul 07, 2024

Final Answer :

True

Explanation :

Preauthorized payments allow for immediate transfer of funds from the payer's to the payee's account, reducing the time it takes for the payee to access the funds, thereby reducing collection float.

Learning Objectives

Understand the role and mechanism of preauthorized payments and their impact on collection time.

Preauthorized payments help reduce collection float.

Definitions

Learning Objectives

Learning Objectives

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