Delayed Disbursement

DEFINITION of 'Delayed Disbursement'

A cash management technique that involves a company paying vendors and/or other creditors by checks drawn on banks located in remote areas. Commercial banks will typically delay the availability of funds to the depositor of such checks for up to five days as they await payment from the paying bank.

BREAKING DOWN 'Delayed Disbursement'

Companies use this technique as a way to maximize disbursement float, a term that describes a decrease in book cash while delaying a change in bank cash.

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RELATED FAQS
  1. What is the difference between drawdown and disbursement?

    Learn about some of the many definitions for financial drawdowns and disbursements, which represent transfers of funds between ... Read Answer >>
  2. What is the difference between holdover float and transportation float?

    Find out about float, which may become a thing of the past due to the steady decline of check writing and new services in ... Read Answer >>
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    Understand what the capital adequacy ratio is and why it is a very important metric of financial soundness for evaluating ... Read Answer >>
  6. Why does float usually increase at the beginning of the week?

    Find out more about float and how checking float is created in the American banking system. Learn more about why the Federal ... Read Answer >>
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