Alternative Disbursement Arrangements
When companies increase their global reach, they often require alternative disbursement arrangements to be put in place. Disbursement is the process of paying out a company’s money, whether to suppliers, customers, employees or other third parties. These arrangements need to be appropriate to the type of money being disbursed as well as the jurisdiction in which it is disbursed.
There are multiple types of alternative disbursement arrangements available, which companies can use depending on their individual needs. Common methods include:
Wire transfers: Wire transfers are a reliable method of transferring money. Companies of all sizes use wire transfers to make payments to suppliers or other business partners. The advantage of a wire transfer is that the funds can be sent almost instantly, which is incredibly helpful for companies that must pay their suppliers on a predetermined schedule.
Electronic Funds Transfer (EFT): EFTs are a secure way for companies to transfer money electronically. Like wire transfers, EFTs are fast and reliable, but are more routinely used for transferring funds from one bank account to another in the same jurisdiction.
Checks: Writing a check is one of the oldest ways of disbursing funds. Checks are also widely accepted, making them ideal for payments to individuals, such as employees and tenants, who may not have access to bank accounts or other banking services.
Direct Deposits: Direct deposit is a convenient method of disbursing funds, as the funds are deposited directly into the recipient’s bank account. This method is commonly used for employee payroll and can be set up easily.
Third-party payment services: Third-party payment services such as PayPal, Skrill or IDeal are a great way to transfer money between companies or individuals quickly and easily. These services allow companies to make secure payments to anybody with an account registered with the service.
Payment cards: Companies can use payment cards to disburse funds quickly and easily. The payments are secure and the money can be accessed immediately, which is great for companies dealing with sensitive customer data. Additionally, companies can easily track the usage of their payment cards and ensure that the funds are only used for approved purchases.
Alternative disbursement arrangements stored value cards: Stored value cards are a great way for companies to disburse funds securely and conveniently. The cards can be used to pay for goods and services, or to withdraw cash from an ATM. Stored value cards also provide companies with a way to monitor the usage of their funds and can be used to easily manage employee spending.
These are just some of the alternative disbursement arrangements available. Depending on the jurisdiction in which the funds are being disbursed, companies may need to use a combination of payment methods. It is also important to remember that regardless of the payment method used, companies should always ensure they are compliant with local laws. Failing to do so could result in fines or other penalties.
