The costs of a lockbox collection system include

Question

Quizplus · Accepted Answer

The costs of a lockbox collection system include foregone returns on the required compensating balances and service fees charged by the bank. This is because the bank typically requires the company to maintain a certain minimum balance in order to use the lockbox service, and this balance does not earn interest for the company. Additionally, the bank charges fees for the service itself, which can vary depending on the volume of payments processed. Increased bad-debt expenses are not typically associated with lockbox collection systems.

The Costs of a Lockbox Collection System Include