Which is a cash management tactic aimed at accelerating cash receipts?

Which is a cash management tactic aimed at accelerating cash receipts?

• A. Accelerate collections
• B. Decelerate disbursements
• C. Increase investment options
• D. Decrease borrowing needs

Answer: (A)

The main concept here is speeding up cash inflows to improve liquidity. Accelerating collections directly targets how quickly money from customers comes in after a sale. By using tactics like prompt invoicing, offering early-payment discounts, enabling electronic payments, and employing a lockbox system, a company reduces the time between invoicing and cash receipt. The result is more cash available sooner, lower days sales outstanding, and greater cash flow predictability, which strengthens liquidity and reduces the need for short-term financing. Delaying cash outflows, rather than accelerating inflows, can also help the cash position but doesn’t address obtaining funds faster from customers. Increasing investment options concerns what to do with cash once it’s received, not how quickly it’s received. Decreasing borrowing needs relates to financing structure and funding requirements, not the timing of receipts.

The main concept here is speeding up cash inflows to improve liquidity. Accelerating collections directly targets how quickly money from customers comes in after a sale. By using tactics like prompt invoicing, offering early-payment discounts, enabling electronic payments, and employing a lockbox system, a company reduces the time between invoicing and cash receipt. The result is more cash available sooner, lower days sales outstanding, and greater cash flow predictability, which strengthens liquidity and reduces the need for short-term financing.

Delaying cash outflows, rather than accelerating inflows, can also help the cash position but doesn’t address obtaining funds faster from customers. Increasing investment options concerns what to do with cash once it’s received, not how quickly it’s received. Decreasing borrowing needs relates to financing structure and funding requirements, not the timing of receipts.