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Homework answers / question archive / Efficient funds management attempts to reduce mailing and clearing time
Efficient funds management attempts to reduce mailing and clearing time. Two methods do this by:
A. moving collections and deposits closer together in concentration banks; and moving surplus funds quickly by wire transfers.
B. moving mailing points to cross country locations and using depository drafts to transfer funds.
C. drawing checks against zero balance accounts and using cross country mailing.
D. wiring funds to zero balance accounts and using lockboxes in many cities.
E. None of the above.
The correct option is A. moving collections and deposits closer together in concentration banks and moving surplus funds quickly by wire transfers.
If funds are moved and deposited in concentration banks, it'll be easier to save time, and this lead to fasten up the mailing and clearing time. Moreover, by using wire transfers, one can simply transfer the money without delay.
The explanation for incorrect options
Option B: The depository drafts do not fasten up the clearing time compared to wire transfers. Using mail points in different country locations can make delay in managing the mailing time.
Option C: Drawing checks against zero balance account not help the business to decrease mailing and clearing time, especially when they deal with massive collections from customers. Cross country mailing can delay the time to render the service.
Option D: Wiring funds to zero balance accounts are not allowed foreign customer transfers, which is another reason to delay the clearing and mailing time. There is a high chance of clerical errors while collecting payments from lockboxes, which may increase the clearing and mailing time too.
Option E: Since option A is the right answer (moving collections and deposits closer together in concentration banks, and moving surplus funds quickly by wire transfers). It is an incorrect option.
