Skip to content

CS Executive · Corporate Accounting and Financial Management · Working Capital Management

Which of the following is a technique used to speed up the collection of cash from customers?

The lock-box system speeds up collections. Customers mail payments to a local post office box that the bank empties and credits promptly, reducing mail and processing delay. The other options slow down payments the firm makes rather than hastening receipts.

  1. ALock-box systemCorrect
  2. BDelaying payment to suppliers
  3. CPlaying the float on cheques issued
  4. DZero-balance disbursement stretching

Explanation

A lock-box system has customers send payments to a post box near them, which the bank clears directly, cutting mailing and processing time. Delaying payments and playing the float are disbursement-side techniques that slow outflows, so they do not speed up collections.

Did you get it right without looking?

One question tells you little. A timed set on Working Capital Management shows your real accuracy, how long you take and where you lose marks.

Practise Working Capital ManagementFree diagnostic mock

More Working Capital Management questions