What Is a Disbursement Check?

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In a business context, the term “disbursement check” refers to a method of payment for a wide range of transactions. It doesn't relate to a specific type of payable. When you write a check from a business account, referring to the payment as a disbursement check is appropriate in many situations, but it isn't a term most people use for the checks they write to pay personal expenses.

What Disbursement Means

A disbursement is nothing more than the payment of money from a bank account or other fund. Therefore, if you purchase something with cash -- even if the item is used in a business -- it's incorrect to refer to it as a disbursement.

Common Usage

Businesses use disbursement checks for a variety of payment types. These payments might cover employee salaries and other payroll expenses; reimbursements paid to workers for their out-of-pocket expenses; payments to suppliers, vendors and contractors; dividend payments to shareholders; and profit distributions made to other business owners.



About the Author

Michael Marz has worked in the financial sector since 2002, specializing in wealth and estate planning. After spending six years working for a large investment bank and an accounting firm, Marz is now self-employed as a consultant, focusing on complex estate and gift tax compliance and planning.

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  • Johnny Chih-Chung Chang/iStock/Getty Images