Disburse vs. Reimburse — What's the Difference?
By Tayyaba Rehman & Maham Liaqat — Updated on March 15, 2024
Disburse involves paying out money from a fund or account for various expenses, while reimburse refers to repaying someone for money they have spent or lost.
Difference Between Disburse and Reimburse
Table of Contents
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Key Differences
Disbursing funds means to pay out money, often from a collected pool or account, to cover expenses, fulfill obligations, or fund operations. It's a broader term that encompasses the act of payment for any purpose. On the other hand, to reimburse is to pay someone back for expenses they have already incurred on behalf of another entity or individual, often as a repayment for costs that should not have been their responsibility. Reimbursement is, therefore, a specific type of disbursement that occurs after the expenditure has been made by someone else, typically as a way of rectifying or acknowledging that the initial payment should be covered by the reimbursing party.
While disbursements can be part of routine financial operations in businesses, governments, and other organizations, reimbursements are often made in response to specific situations where individuals have incurred costs that are agreed to be the responsibility of the organization. This distinction underlines the reactive nature of reimbursements compared to the proactive or planned nature of disbursements.
For instance, a company may disburse salaries to employees and payments to vendors as part of its regular operations. Whereas, it might reimburse an employee for travel expenses when the employee pays out of pocket for business-related travel, underlining a specific agreement or policy that those expenses are covered by the employer.
The documentation and approval processes also differ significantly between the two. Disbursements may require routine approvals and budget checks, ensuring that funds are available and allocated correctly. Reimbursements, however, often require proof of expenditure, such as receipts or invoices, to ensure that the amounts paid out reflect actual expenses incurred.
While all reimbursements are disbursements, not all disbursements are reimbursements. The former is a subset focused on repaying or compensating for expenses already incurred, while the latter represents a broader category of financial transactions involving the payment of money from funds or accounts.
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Comparison Chart
Definition
Paying out money from a fund or account for various purposes.
Repaying someone for costs they've incurred on behalf of another.
Nature
Broader term for any payment.
Specific to repayment for incurred expenses.
Timing
Can occur before or after expenses are incurred.
Occurs after expenses have been incurred.
Documentation
May require budget approval and allocation checks.
Requires proof of expenditure, like receipts.
Examples
Salaries, operational expenses, investments.
Travel expenses, business expenses paid by employees.
Compare with Definitions
Disburse
To pay out money from a fund or account.
The finance department disburses funds for the new project next week.
Reimburse
To repay money that someone has spent on your behalf.
I was reimbursed for my travel expenses after the business trip.
Disburse
Does not imply repayment for a prior expense.
The company disburses bonuses at the year-end.
Reimburse
Requires proof or documentation of the expense.
Submit your receipts to be reimbursed for office supplies.
Disburse
Involves allocating money for specific expenses or operations.
The charity disburses donations to various causes annually.
Reimburse
Typically follows specific policies or agreements.
Employees are reimbursed for mobile phone usage according to company policy.
Disburse
Can relate to both routine and non-routine payments.
Monthly rent payments are disbursed to the landlord on the first.
Reimburse
Focused on rectifying or fulfilling a financial obligation.
The university reimburses faculty for attending academic conferences.
Disburse
Broad in application, covering any payment activity.
The government disburses grants to support small businesses.
Reimburse
Always involves compensation for costs already incurred.
The insurance company reimbursed the damage repairs to my car.
Disburse
To pay out, as from a fund; expend.
Reimburse
To repay (money spent); refund.
Disburse
(finance) To pay out, expend; usually from a public fund or treasury.
Reimburse
To pay back or compensate (another party) for money spent or losses incurred.
Disburse
To pay out; to expend; - usually from a public fund or treasury.
The duty of collecting and disbursing his revenues.
Reimburse
To compensate with payment; especially, to repay money spent on one's behalf.
The company will reimburse you for your expenses for the business trip.
Disburse
Pay out
Reimburse
To replace in a treasury or purse, as an equivalent for what has been taken, lost, or expended; to refund; to pay back; to restore; as, to reimburse the expenses of a war.
Reimburse
To make restoration or payment of an equivalent to (a person); to pay back to; to indemnify; - often reflexive; as, to reimburse one's self by successful speculation.
Reimburse
Pay back for some expense incurred;
Can the company reimburse me for my professional travel?
Reimburse
Reimburse or compensate (someone), as for a loss
Common Curiosities
What does it mean to disburse funds?
To disburse funds means to pay out money from a specific source, such as a fund or account, for a variety of purposes like expenses, investments, or operations.
Why is reimbursement important in a business setting?
Reimbursement is important as it ensures employees are not financially burdened by business-related expenses and encourages adherence to business policies and financial integrity.
Can a company disburse funds for any reason?
A company can disburse funds for a wide range of reasons, as long as they are aligned with the company's policies, budget, and financial planning.
What kind of expenses can be reimbursed?
Expenses that can be reimbursed typically include those incurred during the course of performing job duties, such as travel, lodging, meals, and supplies, according to company policy.
How do organizations benefit from a clear reimbursement policy?
A clear reimbursement policy helps ensure fair treatment, reduces misunderstandings, and streamlines the processing of reimbursements, benefiting both the organization and its members.
Are disbursements and reimbursements taxable?
The tax implications of disbursements and reimbursements depend on their nature, purpose, and local tax laws. Reimbursements made according to an accountable plan, for example, are often not taxable to the recipient.
How do companies track disbursements and reimbursements?
Companies use financial accounting systems to track disbursements and reimbursements, ensuring accurate record-keeping for budgeting, planning, and tax purposes.
Is there a difference in documentation between disburse and reimburse?
Yes, disbursing often involves internal budget approvals and planning, while reimbursement requires external proof of expenditure, like receipts or invoices, to validate the claim.
What happens if a reimbursement claim is denied?
If a reimbursement claim is denied, the claimant can seek clarification, provide additional documentation if necessary, or appeal the decision based on the organization’s policies.
What is the process of reimbursement?
Reimbursement involves repaying someone for expenses they have incurred on behalf of another party, usually requiring proof of expenditure and adherence to specific policies.
How do I get reimbursed for business expenses?
To get reimbursed for business expenses, you typically need to submit a claim with the necessary documentation, such as receipts, and follow your organization’s reimbursement procedures.
Can disbursements be planned ahead of time?
Disbursements can be and often are planned ahead of time, especially for recurring expenses like salaries, rent, or utility payments.
What role do approval processes play in disbursements and reimbursements?
Approval processes ensure that disbursements and reimbursements are authorized, appropriate, and within budget, helping to maintain financial control and integrity.
Can individuals also disburse and reimburse?
Yes, individuals can engage in disbursing and reimbursing in personal contexts, such as family expenses or settling debts with friends, though these actions are more commonly associated with organizations.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
Co-written by
Maham Liaqat
