Why would a financial manager want to slow down disbursements?
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.
- 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.
- 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.
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Learn more about this topic:
from Finance 101: Principles of FinanceChapter 18 / Lesson 4