Which of the following conditions would make a lock-box system potentially more attractive to a firm?
A) The interest rate declines.
B) Mail time saved is lower.
C) Payment size is higher.
D) Processing time saved is lower.

Question

Quizplus · Accepted Answer

A lock-box system is a cash management technique in which a company's customers send payments to a designated post office box that is monitored by a bank. The bank processes the payments and deposits the funds directly into the company's bank account, which can help to accelerate the availability of funds. Therefore, a firm would find a lock-box system more attractive if the payment size is higher, as this would result in larger deposits and potentially faster access to funds. Choices A, B, and D would not necessarily have an impact on the attractiveness of a lock-box system.

Which of the Following Conditions Would Make a Lock-Box System