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Choosing the right payment method for your business

A woman sitting on a sofa and managing her business bills.
Rotem Tal
Published at | Updated:

The end of the month is fast approaching and your business bills are likely stacking up. Luckily there were no unexpected expenses this month, but it’s time to get to those unpaid invoices. You have them all organized, and all that’s left to do is schedule and pay them. Good job!

Your preparation has paid off, there’s one question that you still need to answer: how should you process each one of your vendor payments?

Juggling payment methods

Some vendors only accept checks, while others want the payment transferred straight into their bank account. You, on the other hand, probably want to use your credit card so you can collect points for your next vacation to Cancun or for concert tickets to see Elton John. Making payments by checks, ACH bank transfer, debit, or credit cards creates a delicate dance that, if done correctly, can give your business the peaceful feeling of floating on air.

The continuous advancement of technology has evolved and innovated the traditional ways businesses make and receive payments. Today, businesses have a wide range of B2BB2BB2B (business to business) refers to operations done between businesses. B2B payments are transactions made between two businesses or companies. payment methods to choose from, but it’s not always clear which one is best for each situation.

Business payments don’t come in a one size fits all answer. So how do you make sure you’re choosing the right method? There are a few pros and cons to each method, so you need to consider them all when planning your next payments. In this guide, we’ll go over the different payment options available for businesses. Gather your bills and let’s dive in.

Choose the right payment method for you

There are six payment methods we’ll cover in this guide:

Illustrations showing the different payment methods–check, cash, credit card, debit card, bank transfer, and international wire.

Let’s dive in.


Dating back as far as 1000 B.C. humans have accepted coins and paper money. While lots has changed since then, many business owners still believe that “cash is king” and continue to accept this payment method today. When you work with a lot of local vendors, cash is an easy option. After all, no vendor has ever said “I have too much cash”. On top of that, vendors and suppliers may offer your business special discounts for cash payments. 

Cash payments are a relatively safe, rapid, and low-overhead payment method that is ideal for small businesses. However, it can also be tricky, as you’ll need to be super meticulous when keeping track of incoming cash. Plus,  you’ll need a good accounting system. Since you need to rely on good faith and paper records, paying with cash requires a really strong relationship and a lot of trust between you and your local vendors.

Let’s say you hand your produce vendor an envelope with $1,200 cash for the month’s vegetable supplies. You need to have faith that they will forward the money to the right person, and that they will mark your bills as paid. You can get extra assurance by asking for a receipt marked and signed as paid. 

Pros and cons of paying with cash


  • Fast
  • No transaction fees
  • Exclusive discounts


  • Not trackable
  • Not 100% secure
  • Requires in-person meeting
  • Not good for tax write-offs

Red flags
If you’re working with a vendor that always demands to receive payments in the form of cash, you should make sure you get proof of payment. This could be a sign that the vendor is evading taxes, and you definitely want to steer away from working with businesses like that.


Over 60% of fraud occurs through checking accounts and is due to the usage of checks. How exactly is that possible? 

Well, around 47% of small business owners in the U.S. still use checks. Think about it—every time you send or hand your vendors a check you’re essentially giving out sensitive business information. Your account number, routing number, and personal signature are all on the check. 

Why are checks still being used?

Improving processes and using technology to give your business a leading edge is appealing to most. So why are businesses still using such outdated, risky methods of payment? The truth is that most vendors are comfortable receiving payments this way because that’s just how they’ve always done it–no matter how slow and clunky the process is. 

Writing and sending checks requires more time in the back office and costs some businesses an extra $1,600 per year. Ordering checkbooks, envelopes, stamps, and the extra time check handling requires all add up to big bucks. Another irritating part is that even if you sent a check weeks ago, you have no control over what happens to it as soon as you put it in the mailbox.

The check journey

Let’s say you owe $450 to Speedy Suppliers, your office equipment vendor. If everything aligns and there are no hiccups along the way, your paper check’s journey will look something like this: 

Illustration emphasizing the journey of a chack from customer to merchant.

Technology has sped up this process, yet paying by check is still the slowest payment method out there. 

Pros and cons of paying with checks


  • Trackable
  • Easy to reconcile


  • High costs
  • Time-consuming
  • Lost checks
  • Lots of back and forth (“where is my check?”)
  • Prone to fraud
  • Slow (5-7 business days to arrive)

Credit card

Many people don’t know you can actually pay business bills with your credit card. Credit cards are paid off monthly, so if you schedule a payment at the beginning of the month, you don’t have to pay your bill until your billing date. That means you have more cash on hand to use now. 

But while being one of the fastest payment options out there, credit cards are generally more expensive. Many vendors and suppliers don’t accept cards for business payments which makes this method a bit more limiting. 

Pros and cons of paying with a credit card


  • Trackable
  • Control over cash flow
  • Points and rewards
  • Build credit
  • Secure


  • High fees (1%- 4%)
  • Not accepted by everyone

Debit card

Debit cards look just like credit cards, but they work in a slightly different way. Unlike credit cards, businesses need to actually have funds in their bank account in order to make a purchase with debit cards. Some businesses prefer not to use credit cards, whether because of poor credit history or personal choice. 

A debit card gives businesses the convenience of making purchases without the need to carry cash. They make a payment and it immediately comes out of their bank account. That way they don’t need to predict next week’s or next month’s expenses. They get their financial overview directly from their bank account and then there are no surprises. 

The issue with this is cash flowCash flowCash flow is the amount of cash (or cash equivalents) that goes in and out. When more cash is coming in than going out, it’s known as positive cash flow. When the outgoing cash exceeds the incoming cash, it’s called negative cash flow.. If a business has a lot of upfront costs– for supplies, rent, salary, or other expenses—it might not be able to stay afloat through the next months or down seasons. 

Pros and cons of paying with a debit card


  • Trackable
  • Availability
  • Control debt
  • Secure


  • High fees
  • Spend limit

Bank transfer

Many businesses like to send and receive ACH bank transfers. ACH stands for Automated Clearing House. These payments are a type of electronic funds transfer (EFT) made through a network of financial institutions (also known as clearing houses).  

The networks allow for the secure electronic transfer of money between bank accounts in the U.S. ACH bank transfers are trackable, secure, reliable, and relatively fast ( 3-5 business days to receive). 

Pros and cons of paying with ACH bank transfers


  • Trackable: Payments have an electronic footprint.
  • Lower cost: Transfers usually have a low cost attached to them, if at all. 


  • Bank details needed
  • Slow 
  • Localized
  • Strict cut-off times

International wire transfer

Every industry has different needs—some businesses only work with local vendors, and some have international suppliers. Others partner with local companies and outsource some work to freelancers abroad. International wire involves sending electronic payments to a payeePayeeAll transactions have at least two players–the payor is the one who’s paying, and the payee is the one who receives the payment. in a different country, either in local currency or U.S. dollars.

Sending international wire transfers across borders can cost anywhere from $35-$50 per transaction when you do it through your bank. So you may be saving on supplies, but it might not pay off in the long run as fees do add up. 

Pros and cons of paying with International wire transfers


  • Cross border sourcing
  • Trackable


  • High fees
  • Bank details needed
  • Transfer time 1-5 business days

Online payment tools

Online payment tools can help businesses simplify payments, save time and organize it all on one platform. Moreover, they offer solutions to some of the ‘cons’ the other payment methods pose. 

If, for example, your vendor only accepts checks but you want to pay with a credit card, online tools can help you get around that. The right payment solution will allow you to pay your vendor’s however you want and send them a check on your behalf without including any of your business and personal info. That way you pay however you want, your vendor receives payment the way they want and your business gains that extra layer of protection. 

There aren’t many downsides to using online payment tools. If you want to digitize your accounts receivableAccounts receivableAccounts receivable (AR) is an accounting term that refers to all the money customers owe your business for products or services billed for, but not yet paid for., find a platform with robust features that fit your needs. Make sure platform fees work with your budget, and that it offers the security and support to give you and your vendors peace of mind.

Pros and cons of paying with online payment tools


  • Trackable
  • Easy accounting (syncing with accounting software)
  • Flexibility
  • Easy-to-use
  • International payments
  • Secure


  • Higher fees (some platforms can be expensive)
  • Vendor details needed

It’s all about the right payment method

The right payment method will give your business the balance of speed, cost, and security. It will also improve your vendor relationships and make the process easy for employees in both companies. Ultimately, the payment methods you use will depend on your business, the type of expenses, and the purchases you’re making.

It’s more than likely that you’ll use a mix of these payment methods in order to keep your operations running smoothly.

Keep on reading to learn more about the payment methods available on Melio.Learn more

*This guide 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.