Controlled Disbursement Account [Business Banking 101]

A controlled disbursement account allows businesses to maximize returns on idle (or soon-to-be-used) cash.

In this article, weโ€™ll share exactly what a controlled disbursement account is, who typically uses them, and a few alternatives.

However, if youโ€™re looking to open a business bank account, you may want to consider our available free resources.

You can start right now using our free guides for European banking, including Malta business bank account opening and much more.

But, if youโ€™re just looking to get a better understanding of a controlled disbursement account, keep reading.

Feel free to use the table of contents to jump ahead to the sections most relevant to you.

Table of Contents

  1. Controlled Disbursement Account
  2. Controlled Disbursement in Business Banking
  3. Frequently Asked Questions
  4. Ready to Explore Your Options?

Controlled Disbursement Account

A controlled disbursement account is an account businesses use to manage cash flow and increase returns. In short, the aim of a controlled disbursement account is to maximize the length of time that funds can be exposed to interest before being used to meet obligations. To achieve this, a business releases checks on a daily basis to meet its obligations.

In the following section, weโ€™ll share which businesses commonly benefit from a controlled disbursement account. Plus, weโ€™ll take a look at an alternative method to capture higher interest that is more common when it comes to small and medium-size businesses.

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Controlled Disbursement in Business Banking

Controlled disbursements are commonly used by larger companies dealing with higher-value transactions. However, they can offer value for smaller and medium size businesses as well. This is especially true if you have an account in jurisdictions that offer flexible deposit accounts and high interest.

However, whether a controlled disbursement account is the right choice will depend on the specific needs of the business, available resources to manage the process and the potential interest that the business can gain from this process.

Alternatively, many small and medium size business owners choose to use a laddering strategy. This involved using a series of fixed (or certificates of) deposits of varying maturity. This ensures accessing the short and medium-term cash while also capturing interest that would otherwise be lost.

Frequently Asked Questions

Below are three of the most common questions that we receive from people looking at a controlled disbursement account. If you have further questions you would like answered, donโ€™t hesitate to get in touch with us directly.

What Does Disbursement Direct Deposit Mean?

Disbursement direct deposit is a specific form of payment available to clients at a wide range of banks. Individuals can choose to pay through a disbursement direct deposit if they do not want to issue a physical check or pay for goods or services in cash.

What Is Disbursement in Treasury Management?

In treasury management, disbursement relates to the management of company cash flows in order to maximize the potential return on cash while meeting financial obligations. This includes the delayed payment of obligations through a controlled disbursement account in order to increase interest return on a money market account or other deposit accounts.

Ready to Explore Your Options?

If you would like assistance navigating your banking options at home or abroad, we can help. This includes opening standard business bank accounts or finding banks that offer alternative options, like controlled disbursement accounts.

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Of course, if you have any questions, please contact us directly.

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