What is the purpose of a lockbox plan?
A)It is used for safekeeping cash and marketable securities.
B)It is used to identify inventory safety stocks.
C)It is used to slow down the collection of cheques a firm writes.
D)It is used to speed up the collection of cheques received.

Question

Quizplus · Accepted Answer

The purpose of a lockbox plan is to speed up the collection of cheques received. This is achieved by having the cheques being deposited directly into the company's bank account through a lockbox service, instead of waiting for the physical cheques to be received and deposited manually. This reduces the processing time and improves cash flow management.

What Is the Purpose of a Lockbox Plan