Cash disbursement

A cash disbursement is the outflow of cash paid in exchange for the provision of goods or services. A cash disbursement can also be made to refund a customer, which is recorded as a reduction of sales. Yet another type of cash disbursement is a dividend payment, which is recorded as a reduction in corporate equity.

A cash disbursement can be made with bills or coins, a check, or an electronic funds transfer. If a payment is made with a check, there is typically a delay of a few days before the funds are withdrawn from the company's checking account, due to the impact of mail float and processing float.

Cash disbursements are usually made through the accounts payable system, but funds can also be disbursed through the payroll system and through petty cash.

The cash disbursement process can be outsourced to a company's bank, which issues payments as of the dates authorized by the paying entity, using the funds in the entity's checking account.

Related Courses

Payables Management