Asked by Sophia Winner on Jul 23, 2024
Verified
A method of reducing the collection float which utilizes the facilities of Canada Post is referred to as a _____ system.
A) Mail order.
B) Lockbox.
C) Float.
D) Concentration.
E) Over-the-counter.
Lockbox System
A service offered by banks to companies for the collection of payments from customers, speeding up the process of receiving and depositing checks.
Collection Float
The time between when a check is deposited into a bank and when the amount is credited, affecting cash flow management.
Canada Post
The primary postal operator in Canada, responsible for the collection, sorting, transportation, and delivery of mail and packages across the country and internationally.
- Comprehend the role and rewards of various cash management strategies like lockbox systems, zero-balance accounts, and cash concentration accounts.
- Understand the mechanisms to reduce collection float and the role of electronic payments in managing float.
Verified Answer
MF
Maria Fillieta S.K.Jul 30, 2024
Final Answer :
B
Explanation :
The correct answer is B) Lockbox. A lockbox system is a service offered by banks to companies for the receipt of payment from customers. Under the service, the payments made by customers are directed to a special post office box, rather than going to the company. Canada Post would deliver the payments to the bank's lockbox, and the bank would then process these payments directly. This system reduces the collection float by minimizing the time it takes for a company to receive and process payments.
Learning Objectives
- Comprehend the role and rewards of various cash management strategies like lockbox systems, zero-balance accounts, and cash concentration accounts.
- Understand the mechanisms to reduce collection float and the role of electronic payments in managing float.