Delayed Disbursement

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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.

INVESTOPEDIA EXPLAINS '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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