AMEND CONTENT

5.3.3 Planning and handling disbursements

Funds are usually disbursed to partners in instalments. This limits financial exposure, as the use of funds is accounted for incrementally.
The number of tranches depends on CARE’s assessment of risk-the greater the risk, the more instalments there will usually be. More installments mean more work and administration however. Reduce the number of installments where possible.
Disbursements should depend on adequate progress and financial reports.
The first tranche of funds is almost always disbursed on contract signing.
Subsequent instalments are usually disbursed after a certain percentage of the last tranche is used (often 75% or 90%) and adequate reports are submitted.
A final disbursement (often around 10% of the contract value) is withheld until submission of the final report, audit and resolution of any outstanding issues.
Paying partners on time is one of CARE’s key obligations, yet delays are fairly common. Internal agreement on roles, documents required, sign-off authorities, and turnaround times will facilitate smooth internal processing.
Payments to partners are usually accounted for as advances and are cleared on receipt of reports. This can lead to liability and exchange rate losses. Some COs ask donors to expense sub-grants on disbursal, or invoice for the cost of capital.
Pre-financing by partners makes life easier for CARE, but is often not viable for partners with limited liquidity. It can be unfair to push them to do it.