Disbursement

Disbursements are payments made by any private or public fund to investors. The definition of disbursement can also be understood in terms of giving payment to complete the final payment on certain expenses.

What can disbursement mean for a business?

Disbursement in the business environment regards the cash flow of the business. Once a new item has been purchased by the business the period of the expense and that of the disbursement occurs on two separate occasions.

Disbursements for Investors

This usually refers to a payment made to any investors directly associated with the business or company. These payments can exist in the form of dividends, cash, or a cash equivalent thereof. Usually, shareholders will receive an electronic fund transfer (EFT) of their disbursements.

Disbursement Checks

The form in which disbursements are paid is called a ‘disbursement check.’ This is used to pay for various expenses a business may encounter. These may include:

  • Payroll
  • Payment of Suppliers
  • Wages and Employee Salaries
  • Reimbursements
  • Shareholder Dividends
  • Emergency Expenses
  • Profit Distribution among executives

Disbursements Versus Expenses

In the business environment, these concepts can easily be confused with each other.

Disbursements: This concerns an agent or company paying a specific individual on behalf of another. Furthermore, disbursements are different from reimbursements. Whereas a reimbursement can be considered the exact amount repaid to a business or individual.

Expenses: Generally speaking expenses can be considered any type of purchases made or funds distributed to improve business operations, i.e. purchasing new equipment. These can also include employee salaries, thus making it difficult to differentiate between disbursements and expenses.

The differences between these two concepts can be confusing, thus business owners need to have a firm grip on the expenses running through their business, but also the disbursements they make throughout the financial calendar.

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