National Check Professional (NCP) Certification Practice Test

What is a key benefit of controlled disbursement?

1. Increased transaction fees

2. Longer processing times

3. Potential fraud reduction

4. Ineligible transactions

The correct answer is: Potential fraud reduction

Controlled disbursement is a banking arrangement that allows a company to manage its cash flow more effectively by controlling the timing and amount of disbursements. One of the key benefits of this system is the potential for fraud reduction. By using controlled disbursement, companies can limit the number of transactions and monitor them more closely. This enables them to identify any suspicious activity more readily, as the disbursement process is more transparent and regulated. Additionally, because controlled disbursement accounts typically require that funds be designated for specific transactions, the risk of unauthorized payments is minimized. This structured approach also makes it easier for businesses to implement additional security measures, such as dual controls or transaction alerts, which further enhance the defenses against fraud. Other potential answers in the context of the question do not present advantages but rather imply negative aspects. Increased transaction fees and longer processing times would deter businesses from opting for controlled disbursement, and while ineligible transactions could be a concern, they do not represent a benefit. The focus on fraud reduction highlights why controlled disbursement is a prudent choice for companies looking to safeguard their financial assets.