Disbursement techniques refer to the methods used by organizations to pay vendors or settle financial obligations. The timeliness of payments depends on the technique used.
Why Are Drafts the Best Option for Timely Payments?
Adraftis a payment instrument issued by an organization’s bank, drawn against its account, and typically includes specific payment timing instructions.
Drafts allow the payer to specify the timing of payments, ensuring they are made on time.
Why Other Options Are Incorrect:
A. Warrants:Warrants authorize payments but do not ensure timeliness as they require additional processing before funds are disbursed.
B. Checks:Checks rely on postal delivery and clearing times, which may delay payments.
D. Bank cards:While convenient, bank cards are typically used for immediate payments, not for ensuring future timely disbursements.
References and Documents:
Treasury Financial Manual:Highlights drafts as a disbursement tool for controlling the timing of payments.
GAO Cash Management Guide:Discusses the benefits of drafts in ensuring timely payments.
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