Which one of the following conditions would make a lock-box system potentially more attractive to a firm?
A) Decline in interest rates
B) A 2-day reduction in mail time rather than a 3-day reduction
C) Larger payments
D) Slower processing time

Question

Quizplus · Accepted Answer

A lock-box system is designed to expedite the collection of payments by allowing customers to send payments to a local PO box, which are then processed by a third-party vendor who deposits the payments directly into the firm's bank account. Larger payments would make the lock-box system more attractive to a firm because it would reduce the processing time and increase cash flows. A decline in interest rates, a 2-day reduction in mail time, and slower processing time would not impact the attractiveness of a lock-box system.

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