Melio Explains

Melio explains: How to choose the best payment method?

As a business owner, you need to choose how to pay business bills. But how do you make the choice that’s best for you? We’re here to help so let’s dive in.

Melio explains: How to choose the best payment method?

A little bit more information about payment methods:

Every business owner has to figure out how they want their customers to pay them. This is actually the same question that they have to ask regarding all business expenses—rent, utility bills, taxes, vendors, suppliers, and more.

There’s no one size fits all answer, and the good news is that you don’t have to choose just one payment method to pay all bills. Let’s look at a few real-life examples that will help you figure out what specific method is right for you.


Johnny runs an instrument repair business. He has an at-home workshop, and most of the time, his clients need small mends like guitar string replacement. They tend to pay him with cash.

He buys strings from another small business owner, Jerry, who lives in his neighborhood. Jerry can only accept payment in the form of cash or checks. Because checks are a bit of a hassle, he offers his customers discounts for cash payments.

This is ideal for Johnny–Jerry lives close by so paying with cash is convenient and the price is better this way. However, this requires Johnny to keep a very neat record of payments, which can often be difficult to do.


Another one of Johnny’s vendors is Carla, who sells equipment used to repair violins, cellos, and other string instruments like reamers and cutters. Carla is a renowned supplier and has been running her business for decades. She only accepts checks.

Johnny writes her checks, and they are much easier to track than cash. As he doesn’t write too many monthly checks, this is a great payment method for him. However, writing checks can become very time-consuming and expensive. If many of his vendors only accepted checks, this payment method would have become more of a hassle.

Both Johnny and Carla operate in the San Francisco Bay Area. So Johnny delivers the checks in person. If he had to send them in the mail, it would be tricky as they could get lost, and his bank details are right there on the check. In other words, if it gets lost, it’s prone to fraud.

Credit card

Now let’s move on to Sarah, a fashion designer who sells her clothes online. She makes her own clothes so she has to pay for materials like fabric, buttons, and zippers. She has a seamstress handle the more complicated parts of her designs, which has a cost. She also pays for storage space, rent for her studio, and the fees to manage her website online.

Sarah’s business operates mainly online and so do her payments. She pays for most of her expenses through website checkouts. When she pays by card, her equipment is paid for on time, but she defers the payment to the end of the billing cycle, according to the credit card provider’s terms. This means she might sell some garments before the funds go out of her bank account. She also gets rewards on her card, which she usually uses on herself–as a bonus to her earnings. One of the main benefits of paying with her card is the fact that all of her expenses are very much trackable and come tax season, she’s all set.

Debit card

When Sarah needs better control over her spending, she uses her debit card instead. By using a debit card, the funds go out of her bank account immediately. This way, she never feels like she owes anyone any money.

Bank transfer

Last but not least, we have Barry who’s a travel agent. He mostly works for the private sector, and specializes in organizing family trips. His customers pay him either by credit card or by check. At the end of every month, he deposits all the checks at the bank. After he deposits the money, he starts paying his own business expenses–rent, utilities, Wi-Fi, the travel companies he hires, and so on.

Barry likes to get things done, and so he uses bank transfers to pay for those bills–meaning after the payment is done, he can put it out of his mind. The bank transfers are super easy to track, they get to where they need quickly, and they are as reliable as can be.

Some of his expenses include payments to vendors like tour guides. To pay them by bank transfer means he needs their bank details. However, he works solely with vendors who he has a good relationship with, which definitely helps with this issue.

To make sure Johnny, Sarah, and Barry’s businesses are running smoothly, they need to choose the right payment method for them, for each purpose. Familiarize yourself with all payment methods to be sure you’re on the right track to success.

*The purpose of this page is solely to provide information and should not be considered as financial advice
**Melio does not provide legal, tax or accounting advice; you should consult a professional advisor before making any financial decisions.