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6 WINNING points about Disbursements that could save your company

How you handle Disbursements is a major aspect in any business.

1. You need to know what is coming in but you also need to know what is going out. Going out, DISBURSEMENTS, breaks down into what is needed and what is wanted.

2. Disbursements need to be controlled more than anything else. This determines whether a company will expand or break down and disappear.

3. You need to keep track of all debit orders and regular disbursements. Always know the value of money coming in and what needs to be purchased for production to take place. Only after that look at what can be purchased to expand production.

4. This is how it works:
• Have money to Keep the Creditors happy.
• Purchase things that directly relate to production.
• Purchase things that will expand production.

5. When it comes to Disbursements however, one can feel obliged to continuously buy things and pay for things and sign things off. This is an INCORRECT VIEWPOINT.

The CORRECT VIEWPOINT is to ask whether it is necessary to buy the product or service and will this improve production. In this way the person in charge of Disbursements is in charge of the lifeblood of the business.

6. A major aspect of Disbursements is actually quite the reverse of what the title indicates. It is ‘SAVE!’ Having money in a pool as a cushion for when major Disbursements are needed is required.

For example, an employee sues the company and all the funds have been spent on stationery and new desks. The employee wins the suit and has to be paid out £1.2 million. No reserve pool has been created to provide for such an occurrence.

Auditors, Accountants, Financial Managers, Financial Planners need to keep track of Disbursements. In addition, they need to ensure that there is a proper Financial Plan in place allowing for not only regular expenditure but also for reserves to be held for emergencies.

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