Asked by Aydee Esparza on Jun 25, 2024
Verified
A firm finds that its customer base is growing in geographical terms and needs to reduce its float by obtaining cheques from receiving locations near the customers, rather than having them send their cheques directly to the firm's main office. This setup is called (a) :
A) Lockbox arrangement.
B) Wire transfer arrangement.
C) Cash concentration.
D) Overnight mail.
E) Compensating balance.
Lockbox Arrangement
A service provided by banks to process payments quickly by having checks sent to a special post office box.
Customer Base
The customer base refers to the group of consumers who repeatedly purchase the goods or services of a business.
- Familiarize oneself with the utility and benefits of concentration accounts, lockboxes, and zero-balance accounts in the context of financial management.
Verified Answer
SS
Serop StephanianJun 27, 2024
Final Answer :
A
Explanation :
A lockbox arrangement involves setting up collection points (lockboxes) near customers to speed up the collection of receivables, thereby reducing the float.
Learning Objectives
- Familiarize oneself with the utility and benefits of concentration accounts, lockboxes, and zero-balance accounts in the context of financial management.
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