A company located in Delaware has customers nationwide.The most effective system to deal with the issue of float is to
A) use one lock-box collection system located in the Midwest.
B) have customers send their remittances to the company's corporate office in Delaware.
C) use several regional lock-box systems located geographically around clusters of customers.
D) factor its accounts receivable to a collection agency.

Question

Quizplus · Accepted Answer

Using several regional lock-box systems located around clusters of customers would be the most effective system to deal with the issue of float as it would minimize the time it takes for the company to receive and process payments. This would also reduce the risk of delay and increase the speed of cash inflows. Option A is not recommended as it involves only one location, which could lead to delays and high transportation costs. Option B would take longer for the company to receive payments, and delay the collection process for the organizations cash inflows. Option D involves the cost of the company selling their accounts receivables, thus reducing their profit.

A Company Located in Delaware Has Customers Nationwide