Question
In: Finance
What is a disbursement system, and why is it an important part of short-term financial management?...
What is a disbursement system, and why is it an important part of short-term financial management?
What are the advantages of switching from decentralized to centralized disbursing?
How are simple and complex disbursement systems different??
What is the benefit of a controlled disbursement account??
Solutions
Expert Solution
Disbursement system is related to disbursement or we say allocation also. It is just a act of paying out or disbursing the money to the parties. Examples of disbursement are dividend payment , cash payment of expenses etc.
The importance of disbursement system in short term financial management is that it helps to create values to the firm by changing the company cost structure and also creates value by changing the payment cycles etc.
The advantages of switching from centralized to decentralized disbursement is that it gives a accurate information of disbursement and also the information related to timing and amount of disbursement . And all the data is stores at one place.
Simple and complex disbursement syates are diffrent as simple disbursement is using basic methods for the disbursement of funds and also it include maturing investment while the complex disbursement system is using modern methods and different from it
The benefits of a controles disbursement system are that it helps to maximise the cash for the investment and debt payment . It helps to invest for the long term and it is opposite of delayed disbursement
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