Question

Discuss ways in which technology can be used to streamline cash collections.

Answer 1

Technology can be used to streamline cash collections

An EFT system eliminates paper checks and uses electronic payments between banks. Integrating EFT and EDI, called the financial electronic data interchange, automates billing, and cash collections. — Procurement cards or credit cards can be used

  A lockbox system can reduce delays due to processing and geographical distance between customers and the company. Customers send remittances to a nearby P.O. difficulty: ox; a local bank picks up remittances, deposits cash, and sends remittance advice and copies of all checks to the company. The main disadvantage has cost; the banks charge a service fee up to 1% of the cash processed through the system. Information technology can provide additional efficiencies in the use of lockboxes. An electronic lockbox sends electronic notification of remittances to the company. This method enables the company to begin applying remittances to customer accounts before the photocopies of the checks arrive. — An EFT system eliminates paper checks and uses electronic payments between banks. Integrating EFT and EDI, called the financial electronic data interchange, automates billing, and cash collections. — Procurement cards or credit cards can be used. These cards eliminate the risks and costs associated with creating and maintaining accounts receivable, but cost between 2% to 4% of the gross sales price.