Why would a financial manager want to slow down disbursements?

Question:

Why would a financial manager want to slow down disbursements?

Cash Disbursement:

Cash disbursement refers to the cash that flows out of the firm's accounts within a specific period to settle obligations such as expenses. A cash disbursement is carried out using either notes, coins, check, or electronic fund transfer.

Answer and Explanation:

Reasons for slowing down disbursements.

  1. To increase float. The finance manager may opt to slow down cash disbursement as a way to ensure the company has enough float to carry out the most necessary activities.
  2. Act as a short term financing. By slowing down disbursement, the finance manager may be able to save some money to be used to finance a project, thus acting as a short term financing.

Learn more about this topic:

Loading...
How to Manage Cash Disbursements

from Finance 101: Principles of Finance

Chapter 18 / Lesson 4
2.9K

Related to this Question

Explore our homework questions and answers library