Certified Defense Financial Manager (CDFM) Exam 1 Practice

Moving vendor payments to electronic funds transfer is what the Debt Collection Improvement Act of 1996 emphasizes. The Act required federal agencies to disburse payments to vendors electronically, through the government's EFT network, instead of mainly issuing paper checks. This shift speeds up payments, reduces the costs and errors associated with check processing, and helps standardize funds flow across agencies. It also strengthens financial control and accountability by ensuring timely, trackable transfers into vendors’ bank accounts.

The other options don’t fit this goal: handling cash on site isn’t part of the act’s modernization push; delaying payments by up to 30 days would defeat the purpose of speeding and smoothing cash flows; and forbidding electronic payments contradicts the very objective of moving to a centralized, electronic disbursement system.