[priya1425]

How a draft can increase the payable float and delay cash outflow.
Please see the question below. Answer is Draft.

A working capital technique that increases the payable float and therefore delays the outflow of cash is
Concentration banking.
A draft.
Electronic Data Interchange (EDI).
A lockbox system.

[Mike J]

EDI is electronic and anything electronic should by definition decrease the time a bank needs to verify funds.

Using a lockbox and concentration banking are preferable to banks because they have less to verify. Therefore, the float time is faster.

A traditional check, or draft, has none of these features. The bank this needs more time to verify funds and accounts. Thus, this increases float.

At least this is how I would approach this question. Anyone here reading this response please correct anything here.

[priya1425]

thanks Mike030882

[Author]

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