Disbursement Float
Disbursement float is the time between a payment (a check, for example)
being prepared and its being presented for payment at the government’s
Local Government Cash Management 45
bank. Like collection float, many factors can affect disbursement float, such
as (a) mail time for a check to reach the payee, (b) the time it takes a payee
to deposit a check, (c) the Fed district where the check is initially deposited
and the Fed district where the check is drawn, (d) the receiving and paying
banks’ relationship, and (e) the payment method. If a government pays by
ACH credit, a one-day disbursement float results. That means the government
would have use of those funds for one additional day. Wire transfers are
immediately available funds so there would be no disbursement float.