Disbursement

A disbursement is the payment of money to a third party. This payment can be made directly by the entity that has the obligation to pay, or the payment can be made on behalf of the principal by an agent, such as an attorney. There are a multitude of possible disbursement transactions, including the following:

  • Wages paid to employees
  • Royalties paid for the use of intellectual property
  • Commissions paid to salespeople
  • Dividends paid to investors
  • Invoice payments to suppliers
  • Taxes paid to the government

The most common forms that a disbursement may take are with cash, a check, an automated clearing house electronic transfer, a debit card, and a wire transfer. Disbursements could be made using some other store of value, such as with a trade or swap, but this is difficult to achieve and so represents a tiny proportion of all disbursement transactions.

A disbursement represents a cash outflow, where the payment activity results in a reduction of the available cash balance in a checking account. This reduction can be delayed a few days due to mail float, if the disbursement is mailed to the recipient.