Asked by Julian Jones on Jul 05, 2024
Verified
Which one of the following will decrease a firm's collection time?
A) Encouraging customers to use debit cards rather than cheques.
B) Having payments from all locations mailed directly to the head office rather than to local post office boxes.
C) Recording payments to customer accounts before depositing the cheques.
D) Using a bank in a remote location as your primary bank.
E) Assigning a single employee to open the mail and prepare the deposits rather than using a team approach.
Collection Time
The average period it takes for a business to receive payments owed by its customers for goods or services.
Cheques
Physical, written instruments instructing a bank to pay a specific amount of money from the writer's account to the person or entity named on the cheque.
Debit Cards
Payment cards that deduct money directly from a consumer's checking account to pay for a purchase, contrasting with credit cards which provide a line of credit.
- Understand methods to decrease a firm’s collection time.
Verified Answer
AK
Anastacia KuzminaJul 08, 2024
Final Answer :
A
Explanation :
Encouraging customers to use debit cards rather than cheques will decrease a firm's collection time because transactions with debit cards are processed and cleared more quickly than cheques. This means the firm gains access to the funds faster.
Learning Objectives
- Understand methods to decrease a firm’s collection time.