A firm can delay and favourably affect the control of its cash disbursements through the use of:

Correct option is B

A Zero Balance Account is a special bank account maintained at zero balance by automatically transferring funds from a master account only when needed to cover disbursements. This system allows firms to tightly control and schedule their cash disbursements, ensuring that payments are made exactly when required, neither earlier nor later than necessary.

ZBAs help delay the outflow of cash by controlling the timing of fund transfers to subsidiary accounts. Since funds remain in the master account until disbursement time, firms maximize their use of cash on hand and can delay payments efficiently without risking overdrafts or missed payments. This also helps centralize cash management and improves liquidity control.

Thus, through Zero Balance Accounts, firms gain better control over their disbursement schedule, which favors cash flow management by delaying cash outflows in a controlled and systematic manner.

Information Booster:

• Zero Balance Accounts operate by maintaining zero balance and drawing funds only when needed.

• They facilitate centralized cash control, improving cash forecasting and liquidity management.

• ZBAs delay cash outflows effectively by preventing unnecessary early payments.

• They help reduce idle cash in subsidiary accounts, maximizing interest earnings on pooled funds.

• Widely used in cash concentration and disbursement management strategies.

• Minimize risk of overdrafts and improve fund utilization.

• Enhance operational efficiency by automating fund transfers aligned with payment schedules.

Additional Knowledge:

(a) Bootstrapping payables:
Refers to deliberately delaying supplier payments to conserve cash, but it may harm supplier relationships and is less formalized than ZBAs.

(c) Yield sensing for marketable securities:
Is a technique focused on maximizing returns on short-term investments, unrelated to delaying cash disbursements.

(d) Hedging of intangibles:
Refers to risk management related to intangible assets, not related to cash disbursement timing.