A lockbox system ________.
A)is only used by large companies that can afford to pay for this service
B)deals with cash being received at a post office box that is controlled by the company's bank
C)increases a company's inherent risk, as the firm is now more susceptible to fraud and error
D)enables a firm to completely eliminate/outsource its accounts receivable function

Question

Quizplus · Accepted Answer

A lockbox system deals with cash being received at a post office box that is controlled by the company's bank. It is commonly used by businesses of various sizes as it streamlines and expedites the cash collection process. Option A is incorrect as lockbox services are available to businesses of all sizes. Option C is incorrect as lockbox systems are designed to reduce a company's inherent risk by minimizing handling of cash and checks. Option D is incorrect as lockbox systems typically only outsource the collection of payments, not the entire accounts receivable function.

A Lockbox System ________