Problem 31-27: Lockboxes
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lockbox system. She forecasts that 330 payments a day will be made to lockboxes with an average payment size of $1,800. The bank's charge for operating the lockboxes is $0.43 per check. Assume an interest rate of 8% and a 365-day year.
What reduction in the time to collect and process each check is needed to justify the use of the lockbox system?
Required time reduction = -------- days.