Back to Blog
Published at

B2B payments: meaning, methods, and how to optimize

A coffee shop owner using a laptop and calculator to manage B2B payments to vendors and suppliers.

You’ve probably noticed by now that business payments have their own rules. Unlike the experiences consumers are used to of swiping a card or paying through a mobile app, business-to-business (B2B) transactions are cumbersome. They often utilize outdated traditional payment methods and technological adoption is much slower. 

In this article, we’ll cover what B2B means, the main things that make B2B payments so different, the prominent B2B payment methods, and how using a digital payment solution can help optimize B2B payments.

What does B2B mean?

Business-to-business refers to any deals or transactions done between two or more business entities. This is opposed to business-to-consumer (B2C) deals that involve businesses servicing private individuals. 

Businesses focused only on B2B operate using a different model with different marketing, customer service, and payment strategies, to suit their customers’ needs.

Even if you’re mainly a B2C business, you’ll likely still have at least some business customers. You’ll also inevitably be involved in B2B deals when you pay vendors and suppliers for goods and services.

What makes B2B payments different?

There are many factors affecting B2B payments and making them less flexible than consumer payments. 

First, their volume is much higher. Businesses often buy in bulk or invest in expensive equipment private consumers have little use for. While businesses may be paying less per item, the large quantities they purchase mean they are spending substantial sums in every transaction.

Second, there’s more at stake. When a consumer’s purchase goes wrong, worst-case scenario, they’ll ask for their money back with little to no effect on their prospects. But, for a business, every purchase is a strategic procurement decision so if something doesn’t go exactly right, it can have a huge impact. 

Imagine, for example, a retailer waiting on a large shipment of seasonal holiday items. If it only arrives in late December, this will have several consequences, and each of them can be dire: missing the peak holiday shopping season; frustrated customers leaving empty-handed; severely damaged cash flow as expected earnings from the sale of these items did not come in; and a lot of unwanted inventory they either need to offload at a huge discount or store for a whole year. 

These two aspects of B2B deals—volume and stakes—can explain why businesses are more conservative and less inclined to change their workflows, especially when it comes to payments. 

Another important and unique characteristic of B2B deals is that they are normally not paid on the spot. Invoices for business transactions come with a due date or what’s known as net terms. Depending on their deal with the vendor this means they can often pay 30, 60, or even 90 days after they receive their goods or services.

And, this, boys and girls, is how accounts payable (AP) was born.

What are the most common B2B payment methods?

The common payment methods for business transactions have been around for a while. They are familiar, making them attractive to businesses weary of change, but are not without their flaws. Most businesses tend to alternate between them, depending on their current needs, which can be tedious.

Here’s a quick review of the most widely used B2B payment methods.

Paper checks

Who doesn’t love checks? Before you say “no one, duh,” keep in mind that over 80% of businesses still use paper checks for B2B payments

This means that someone in four out of five U.S. businesses still sits down at least occasionally to fill out and sign checks by hand, then puts them in a stamped envelope and physically goes out to mail them. It then takes said checks several days, or, in some cases, weeks, to arrive at their destination. 

Once delivered and deposited, processing by the bank can also take several business days. These accumulated delays can be problematic when your due date is near. It’s also not easy to properly manage cash flow when you never know when a payment will actually leave your account.

Additionally, checks can get lost or stolen en route. Having your bank account information roaming through the country in an envelope poses an additional security risk making you vulnerable to financial fraud and identity theft.

Bank transfers

Bank transfers are faster and safer than checks. Most businesses send transfers through their bank, either via its phone service, the bank’s website, or its app. 

ACH bank transfers, the common method used domestically, typically take up to three business days to process. They are also relatively cheap with fees under $2 per transaction. 

Wire transfers are more on the pricey side, costing anywhere from $15 to $30 for a domestic transaction. They do excel in speed, however, typically arriving within 24 hours. 

International transactions range in price from around $30 to $50 and take around five business days to complete.


Cash needs no introduction, we all know it’s king. Cash is accepted by almost all businesses and using it to pay often entitles you to a discount. 

The problem is it’s rare for businesses, especially small and medium-sized businesses (SMBs), to have enough cash lying around to pay their bills. It can also be unsafe to keep large amounts of cash anywhere but the bank, as that can make your business a prime target for robbery.

Cash is tricky to deliver too as you can’t safely mail it or use a regular courier. This means you’ll need to deliver it in person, which isn’t always a viable option. On top of the inconvenience, walking around with wads of cash that can be misplaced or stolen at any point in your journey, isn’t advisable.

Debit cards

Debit card transactions are automatically deducted from your account and are processed as fast as credit cards. Debit cards keep a clear record of every payment you make but offer no credit or card rewards.

Because their processing fees are generally lower, some businesses that don’t accept credit cards for business transactions may still be willing to take debit.

Credit cards

Paying business expenses with a credit card has a lot of advantages including holding onto cash for longer to improve cash flow and collecting card rewards, such as cashback and points on large transactions. 

It’s also a fast, convenient, and safe way to pay that can be used remotely either on a vendor’s secure web portal or over the phone. 

The problem? Many B2B businesses don’t accept credit cards because of the associated card processing fees that can reach around 3.5% of the transaction value.

Digital payment platforms

Businesses are slowly learning what consumers have already known for years: digital payments just make life easier. 

B2B payment platforms like Melio allow businesses to pay each other online, giving them complete control over how they pay and get paid. Read on to learn more about how using a digital payment platform can revolutionize the way you handle accounts payable.

Optimize B2B transactions with a digital payment platform

A digital payment platform like Melio can help optimize your AP and B2B payment needs to maximize cash flow and improve vendor relations. Here’s how.

Added security layers

Digital B2B payment solutions use security measures such as encryption and multi-factor authentication to ensure your personal and payment information as well as that of your vendors doesn’t fall into the wrong hands.

Melio also utilizes AI risk and compliance tools to identify potential fraud and minimize the risks to your business.

Scheduling and visibility

With a digital payment platform, you can schedule your payments to go out on time, not a minute too soon or too late. This way you’ll be able to preserve your cash flow without the risk of being late on a payment. You’ll be saving time too, as you can handle all your payments in one sitting.  

You can also track all your business payments on one platform, check their status from anywhere, and address any issues.

Choice of payment methods

Melio gives you the freedom to choose the payment method that works for you for each payment. The best part is it doesn’t affect the way your vendor gets paid. 

So, if you want to pay by credit card1 or ACH bank transferACH bank transferACH is a type of electronic bank-to-bank transfer that goes through the Automated Clearing House network (hence its name). but your vendor only accepts checks, go right ahead!  Melio will just mail them a check on your behalf and you’ll reap the (card) benefits.


Alternating between various payment methods according to your business’s current needs can be crucial to properly managing your finances.

When you’re low on cash, you may prefer to pay by credit card and defer the payment until your next billing cycle. When that isn’t an issue though, you may prefer to save on fees and just send an ACH for free (you read right, ACH-to-ACH bank transfers are completely free on Melio).

Using a single platform to manage your payments means you can do it all in one place without having to log on to your bank’s site, pick up a phone, or use a separate payment portal for each vendor.

Faster payments

Sometimes waiting a few days for your payment to go through just isn’t an option. Whether you’re seizing a time-sensitive opportunity, late on an invoice, or hoping to collect an early bird discount, Melio has your back with same-day ACH,2 instant transfers that arrive in minutes, and credit card payments delivered on the day.2

International payments

Paying vendors across borders can be challenging and expensive. With Melio, you can pay all your vendors, regardless of geographic location, using the same workflow, for a flat fee of just $20.

Pay over time

With this financing option by Melio, your vendor gets paid in full right away while you make your own payment terms. You can choose to pay net 30 or divide a large payment into smaller monthly installments. 

This can be handy for larger investments in growth that will pay off over time or unexpected urgent expenses such as repairs that might damage your cash flow. 

The quick approval process means you’ll know instantly whether your financing application was approved, how much you’ll be paying, and according to what schedule.

Pay on the go

Use Melio’s mobile payment app to schedule and send payments when you’re away from your desk. 

The app has all the main functions of Melio’s web platform, so you can also add vendors or edit the details of existing ones, review the status of your payments, add new bills, and even receive reminders for upcoming due dates.

Be the change you want to see in B2B payments

Business payments are more complicated than consumer payments but they don’t have to feel this way. Using a digital B2B payment solution like Melio gives businesses the straightforward experience consumers expect without compromising on the unique capabilities they need.  

Sign up for Melio today to manage all your business payments on a single platform, complete with international payments, fast payments, and financing options.

*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.