Disbursements are defined simply as the payments made by a corporation. These payments
include payroll, dividends paid to shareholders, trade payables (payments made to
suppliers of goods and services), as well as other miscellaneous payments.
The company making the disbursements has some control of how and when payments are made.
The paying company ("payor") may usually select the payment media used
(cash, check, ACH, wire, etc.) and, to a reasonable degree, the timing of the payment.
This section will focus on check disbursements.
Combating Fraud on Corporate Checking Accounts (White Paper from Bank of America).
Service Provider Listing
Request Individual provider Performance Results
from the Phoenix-Hecht Payables Performance Trackerô
The average clearing time for a given set of disbursement checks will vary depending
on the bank on which they are drawn. This statement is based both on empirical tests
and on the understanding of how deposited checks of various sizes are handled by
banks. This differential clearing speed enables treasury managers to select
disbursement bank sites that will generate greater (or lesser) amounts
of disbursement float.
Methodology used to conduct the Phoenix-Hecht Payables Performance Trackerô
Controlled Disbursement services are utilized by a high percentage of corporate treasury managers. The pricing for disbursement services is very competitive. Large discounts are typically granted for even medium volumes.
Quality Index is a statistically
valid comparison of customer perceptions about bank performance.
The Index rates two perceptions of the Controlled Disbursement product.
Individual bank Quality Index measures must be requested directly
from surveyed banks.
According to the most recent Federal Reserve Payment Study nearly 9 million checks are created daily by businesses to pay other businesses (B2B). The vast majority of these checks are distributed by mail making the U.S. Postal Service a major factor in the payor-to-payee logistics. The checks are imaged by the payee or their designated lockbox bank and enter the check clearing system for transmission to the financial institution on which they are drawn. The final step is to move the value indicated on the check in the opposite direction (from the payor’s account to the depositor’s account). All of this movement of funds is accomplished inexpensively in one day or less. Checks continue to be preferred for business payments because of historical practices within industries as well as technical features of legacy systems, such as the integration of checks with information services and financial controls .
The FBI estimates that check fraud costs businesses in the U.S. more than $12 billion
a year. These losses are split $11 billion to corporations and $1 billion to banks
and other financial organizations. The volume of these losses is growing at a very
rapid rate; (some estimates put it at greater than 30% per year).
Liability for check fraud rests on both banks and check issuers. The fraud
loss will more often be borne by the party in the best position to have prevented
If you discover you have been a victim of check fraud there are no simple, foolproof
solutions for dealing with the situation. The first step should be to review your
options with your bank.
For the protection against fraud you should purchase such bank services as positive
pay, electronic reporting of checks-paid information, account reconcilement services,
and conduct a physical review of paid items on a daily basis.
Treasury Managers should be familiar with the Uniform Commercial Code (UCC)
Article 3, Negotiable Instruments and
Article 4, Bank Deposits and Collections.
Positive Pay as a fraud loss deterrent
A Positive Pay service should be purchased for every disbursement account. When checks are printed the check generation software creates a positive pay file. The
file contains information such as check number, date, amount, and payee. This file is then transmitted to your bank. When a check is presented at your bank for payment, the bank first checks your Positive Pay transmissions to see if the check is valid. Only if the Positive Pay transmission matches the check details will the check be
honored. The bank rejects:
- checks not on the company's list,
- checks that exceed a specific dollar amount, or
- checks that carry dates long past (stale checks).
Electronic imaging makes it possible to replace paper paid
items with an accurate electronic representation and then store, retrieve, display, print and distribute the electronic
image. Image Delivery Systems consist
document processing products used to convert paper documents into digital images that can be stored, retrieved
and delivered in a variety of manners. Images can be delivered to bank customers on CD-ROM media, faxed to customer
locations, or displayed on PC's.
This service aids you in the reconcilement of disbursement
accounts by providing a list of all the checks paid during a given statement period. Additional detail on outstanding
checks and exception items is available when you provide the bank with check issue information.
With the Integrated Disbursement service, your company creates and transmits a single electronic file of check,
ACH, and wire payment instructions. The file contains complete amount, payee, address, and payment-type information.
The bank validates file format, issues an electronic acknowledgment, processes and issues all payments, and releases
remittance and payment advice information. With this service, clients have reduced the total cost of their payment
origination operation without compromising control. (Process flowchart courtesy of