Delayed Disbursement Law and Legal Definition

Delayed disbursement is a cash management technique of delaying payment of a debt by paying with a check drawn on a payor bank located a long distance from the payee. Since, it takes longer for the payee to collect on a check drawn on a distant bank, it allows the drawer to keep the funds in the account earning interest for an extra day or two. Commercial banks will typically delay the availability of funds to the depositor of such checks for up to five days as they await payment from the paying bank.