Deburse and depurse were also used respectively to form debursement and depursement—but these synonyms of disburse and disbursement all quickly declined in value and were never redeemed. Here’s a little more info on the other disbursement types you might encounter. A credit score is a number assigned to an individual by businesses called credit bureaus, that lenders use to gauge the likelihood that an individual will default on a loan. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.

If the disbursements are higher than the cash inflows, a business experiences a deteriorating cash position. Another form of disbursement is payment from financial aid funds like grants, scholarships, and student loans to a student’s account (after tuition to the university is deducted). For example, students or “borrowers” who receive federal student aid might get a loan disbursement from the U.S. Disbursements can be found in contexts other than corporate finance, such as legal costs and student loans. For example, when a law firm pays for billable expenses on behalf of a client that will later be reimbursed to them, those payments are considered disbursements. A startup could also receive a disbursement from a dedicated venture capital fund.

Examples of Disbursements

When the loan is disbursed, the cash has been debited from the lender’s account and credited to the borrower’s account. A drawdown, however, is a consequence of a particular type of disbursement. If you take money out of a retirement account, you receive a disbursement of money.

A disbursement fee is usually a vendor’s charge to cover payments made by the vendor in the course of its work on behalf of a customer. For example, FedEx may pay duty and tax charges for a shipment on behalf of a customer, and then add a disbursement fee to its bill to the customer to cover the payments. Depending on your arrangement with the company, up to all of your mileage expense may be reimbursed by your employer for qualified business trips. The IRS also has a defined mileage allowance to refer to the deductibility of expenses car owners accrue while operating a personal vehicle for business, medical, charity, or moving purposes.

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You can ask your health care provider to file the claim or you can do it yourself. Medicare then reimburses the medical costs directly to the service provider. For example, a company may want to set a higher reimbursement rate for executives or salespeople disbursement meaning in accounting who entertain clients. Companies may also choose to provide employees with a fixed per diem rate. Self-employed individuals can often reimburse themselves for business-related expenses too, and these may be tax-deductible with the IRS as well.

In the world of accounting, keeping track of disbursements is essential. Bookkeepers note every outlay that a business makes, indicating the amount, the account used, the person or company receiving the funds, and the reason for the payment. They enter this information in the company’s general ledger so that the organization has a record of every transaction that it makes. The money is drawn from a dedicated account as a debit and transferred to the recipient’s account as a credit. Here are some examples of disbursements and their entries for better understanding. For example, a company wrote a check to pay Company A for inventory purchased on May 16.

What counts as a disbursement?

Reimbursement can involve discounts or interest fees, depending on the contract and bookkeeping methods. With Accounting Seed’s manual cash disbursement feature, you can make single and batch payments via Salesforce. Accounting Seed’s cloud-based software allows for easy, automated disbursement transactions and smooth disbursement flows. When you automate cash disbursements, you free up valuable time for your accounting team. An automated accounting system like Accounting Seed makes it easy to put your cash disbursements on autopilot.

To learn more about how Tipalti can transform your business with a single automated AP solution, book a free demo today. Some mobile apps can only process types of digital disbursements using an email or phone number. A digital disbursement to a payee doesn’t use a paper check for payment.