Controlled Disbursement

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Definition: Controlled Disbursement

Controlled disbursement is an efficient cash management service provided by banks that allows corporations to review disbursement accounts on a regular basis and eliminate uncertainties pertaining to the clearance of cheque payments. Controlled disbursement maximizes the cash available for making any debt payments or investments.

With controlled disbursement, corporations can make accurate assessments of their daily cash requirements for payment of debts or for making investments. With this service, corporations can keep their funds invested in accounts that earn high interest payments until these funds are needed for making any disbursements. Corporations can earn interest from this service by keeping their funds invested between float times that exist between most financial transactions. Float time refers to the time between submitting and clearing of a cheque, by the bank for payment. Large corporations can thus, take advantage of the float times and earn high interest as they are usually involved in large volume transactions.

Banks offering controlled disbursement services usually provide daily reports to their corporate clients with details on the amount of disbursements, to be charged from client accounts. This early information allows corporations to invest any surplus funds in money market investments.


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