A customer sends payment to a post office box which is emptied by the firm's bank daily. The bank then processes the payments and notifies the firm of the day's collections. This collection technique is known as
A) a direct send.
B) concentration banking.
C) the lockbox system.
D) controlled disbursing.

Question

Quizplus · Accepted Answer

This collection technique is known as the lockbox system, where the customer sends payment to a post office box that is emptied by the firm's bank daily, and the bank processes the payments and notifies the firm of the day's collections. Option A, direct send, is not a known collection technique. Option B, concentration banking, refers to a strategy where a firm collects its cash balances from multiple banks and concentrates them into a single bank account to utilize the overall balances most efficiently. Option D, controlled disbursing, is a cash management technique where a firm uses an account in its bank to control its disbursements by timing them to a specific point in time when the funds are available.

A Customer Sends Payment to a Post Office Box Which