Accounting / Lock Boxes?
October 17th, 2009 | by admin |sugalums asked:
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 400 payment a day will be made to lock boxes with an average payment size of $2,000.00. The bank’s charge for operating the lock boxs is $.40 a check. The interest is $.015 percent a day/
a. If the lock box saves 2 days in collection float, is it worthwhile to adapt the system
b. What minimum reduction in the time to collect and process each check is need to justify use of the lock-box system?
Water Vending Machines
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 400 payment a day will be made to lock boxes with an average payment size of $2,000.00. The bank’s charge for operating the lock boxs is $.40 a check. The interest is $.015 percent a day/
a. If the lock box saves 2 days in collection float, is it worthwhile to adapt the system
b. What minimum reduction in the time to collect and process each check is need to justify use of the lock-box system?
Water Vending Machines
One Response to “Accounting / Lock Boxes?”
By SPLATT on Oct 20, 2009 | Reply
An average of 2667 day reduction in float then it anyway if the mean check size is 2000 and earns 00015 per day two day reduction in processing the overhead in float would be worth 200000015 or 30 based on this alone its not worthwhile to open.