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. How does bank reconciliation affect a cash control policy?

    Understand how the bank reconciliation process augments a company's cash controls and is an essential part of proper cash ... Read Answer >>
  3. 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 >>
  4. How does float affect the nation's money supply?

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