A customer sends payment to a post office box which is emptied by a 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

The collection technique described is the lockbox system, where a company uses a post office box for customers to send payments. The bank empties the box daily, processes the payments, and notifies the company of the collections. This system reduces the processing time for the company and improves cash flow management. Option A (direct send) is not a recognized collection technique, option B (concentration banking) is a technique that involves centralizing funds from multiple sources into a single bank account, and option D (controlled disbursing) is a technique that involves the company controlling the timing and amount of outgoing payments.

A Customer Sends Payment to a Post Office Box Which