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 average payment sizes
D)Slower processing time

Question

Quizplus · Accepted Answer

A lock-box system is designed to expedite the collection of receivables. Larger average payment sizes would increase the total amount of cash collected, thus making a lock-box system more attractive. Decline in interest rates, a 2-day reduction in mail time, and slower processing time would not have a significant impact on the attractiveness of a lock-box system.

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