What does disbursement mean? Understanding digital payment processing

When it comes to the payments evolution, digital leads the charge. Younger generations continue to drive the popularity of digital wallet use, and those preferences are starting to mirror themselves in the B2B space. Research suggests that as more consumers add digital disbursements to their personal lives, businesses have been next in line to adopt more digital strategies toward payments, with more than 85 percent of businesses reporting they would prefer to receive electronic payments.

What does disbursement mean?

Plainly, the definition of disbursement is the act of paying money from a fund. Within the payments ecosystem, this simply means a payment made from one party to another.

The ideal digital disbursement solution is easy to use, maximizes the opportunity for automation and offers the least amount of disruption to existing processes. For example, eChecks powered by Deluxe Payment Exchange accomplish this by digitizing the traditional check payment without any changes to existing accounting processes. This allows the payor to disburse funds quickly, efficiently and securely.

What are the different types of disbursements?

A payment (or disbursement) come in a few forms, including:

• A cash disbursement, meaning the payment is made using cash
• A digital disbursement such as an eCheck, ACH or money deposited directly from bank account

How does digital disbursement work?

A digital disbursement moves funds from one account to another. Using eChecks as an example, this is done with an electronic check only — the process is all digital. Not only does this play into consumer and business payment preferences for more digital-forward payments, but compared to a check in the mail, it shrinks the number of human touchpoints from eight to just two, helping reduce the potential fraud risk that can arise with mail-based payments.

Benefits of digital disbursements

Not only do digital disbursements modernize payment streams, but they can help improve cash flow visibility, reduce manual work and create a better payment experience for vendors and recipients. Key benefits of digital disbursement include:

1. Faster delivery

It doesn’t get much faster than this: When weighing a check in the mail against a digital disbursement, the latter is nearly instant, which can help businesses pay recipients sooner and support time-sensitive disbursements.

2. Lower administrative burden

Sending traditional payments often requires having a lot of information about the payee; with digital disbursement options like eChecks, all that’s needed is an email. Additionally, the difference between stuffing a hundred envelopes compared to a few clicks on the computer is a undeniable time saver. Digital disbursements help lower administrative burdens by reducing paper handling, printing, mailing and manual reconciliation.

3. More cost savings

When making or receiving payments, high costs and fees are a continuing issue for businesses, with 48 percent flagging this as their top pain point in a recent Federal Reserve report. Digital disbursements support improved cost efficiency by reducing manual labor, postage fees and traditional check printing costs. This disbursement type also allows the payor to hold onto funds longer when necessary, giving them a greater control of cash flow.

4. Greater automation opportunities

A digital-first payment strategy creates a stronger foundation for automation and integration with accounting workflows, helping businesses scale without adding excessive manual effort. Businesses note that the top three barriers to increasing the use of electronic payments are a shortage of IT resources for implementation, lack of integration between electronic payment and accounting systems, and the high cost of making changes to internal systems. eChecks in conjunction with Deluxe Payment Exchange helps businesses automate their payment processes with seamless integration to overcome these barriers.

Sending eChecks with Deluxe Payment Exchange

When it comes to disbursements, Deluxe Payment Exchange can help your business save time and money. Watch this quick overview to learn how: