The principle objective of a lockbox system is to:
A)ensure the safety of accounts receivable collections.
B)allow collected accounts receivable to earn interest while they are being processed.
C)reduce mailing and processing time for accounts receivable.
D)provide an accurate accounting of accounts receivable collections.

Question

Quizplus · Accepted Answer

The primary objective of a lockbox system is to reduce the mailing and processing time for accounts receivable. This is achieved by having customers send their payments directly to a special address (the lockbox), where the payments are collected and processed quickly and efficiently. This helps to speed up the cash flow cycle and reduce the risk of delays or errors in processing. While a lockbox system can also provide enhanced safety, accuracy, and interest-earning potential for accounts receivable collections, these are secondary benefits rather than the primary objective.

The Principle Objective of a Lockbox System Is To