Question

Which of the following would not be an effective way to reduce the net float?

A) Introduce a lockbox system

B) Mail payment cheques from remote locations

C) Maintain a zero-balance account

D) Arrange preauthorized payments with customers

E) All of the choices would reduce the net float

Answer 1

Which of the following would not be an effective way to reduce the net float?

The total amount of floatis defined as subtracting the money spent but not yet taken out of the account and vice versa with respect to collections.

A) Introduce a lockbox system

B) Mail payment cheques from remote locations

C) Maintain a zero-balance account

D) Arrange preauthorized payments with customers

E) All of the choices would reduce the net float

All of the above items reduce the net float.