Small business expenses: What payment method is best

Small business expenses: What payment method is best?

There are more ways for small businesses to pay their bills and expenses than ever: old fashioned checks; debit, credit and purchasing cards; automated clearinghouse (ACH) transactions and even payment apps.

What’s the most efficient, cost-effective and secure way to make payments? Weigh the following priorities:

  • Security
  • Cost to the company
  • Speed with which the payment needs to be made
  • Most effective returns or protections

For example, some vendors offer discount options for timely or early payments. Credit cards offer purchase protection.

Paper Checks

The majority of small businesses still use paper checks to pay other businesses, at least occasionally. While it may be impractical to eliminate checks entirely, there are many reasons to move away from paper, and check fraud and mail delays are high on that list. Reserve paper check payments only for employees and vendors that will not provide their banking information for you to send them electronic payments.

Credit Cards

Credit cards can be a useful tool for your business, as long as they’re used appropriately. Business cards often will offer better APRs than personal cards, but interest charges for unpaid balances can still be high. Make sure you know your card's APR and annual fee (if any). Uses and benefits include:

  • Making recurring payments. Not only does this provide some built-in fraud detection, but it can also help you improve your business’s credit score and help you keep more cash on hand.
  • Tracking expenses. Using credit cards can help you easily keep track of your business expenses. Credit card interest for business-related expenses is deductible, subject to an IRS maximum.
  • Covering short-term expenses. Credit cards can come in handy when you need to make a short-term financial outlay and expect it to be recovered quickly.
  • Staying current. Credit cards also may help you stay current with your vendors if you need to hire a subcontractor before you get paid.
  • Taking advantage of rewards. Many cards will reward purchases for office supplies or hotel stays.

There are several types of credit cards for business. Purchasing cards, including the virtual and ghost account types, are useful for businesses that put purchasing power in the hands of multiple teams and individuals. Purchasing cards offer key security and control features plus cardholder expense reporting. Virtual and ghost accounts bring all the security benefits of a physical card, including restrictions on transaction types and amounts, but limit the chances the card would be stolen.

Automated Clearing House (ACH) and Wire Transfers

ACH and wire transfers allow for layered approval, meaning your team can initiate a transaction and you as the leader will approve it. Everything is done through a secure online portal you control, and with both ACH and wire, your bank will have built-in safeguards to verify your identity before anything gets processed.

Wire transfers are reliable and safe method of transferring a considerable sum of money. Although the transfer comes with a fee (depending on the amount being transferred and the destination), it’s efficient, effective and secure, provided you follow protocols for verifying the identity of the beneficiary and the validity of the request.

Payment Apps

There are a number of payment apps that you can connect to a credit or debit card or bank account. These are useful for paying parties you know and trust, and their main benefits are speed (some apps transfer funds from your account directly into the payee’s enrolled account within minutes) and the protection of your card or account number (from your payee). The drawback of that speed and efficiency? You can’t retrieve the money sent by direct transfer, and there’s no payment protection if a scammer tricks you into authorizing one. Additionally, the protection of your card and account data is only as good as the app’s security, so choose a reputable company and read the fine print.


Cash payments have become somewhat obsolete, but they’re useful in small quantities and at a local level. Making large cash payments is an unsafe and untraceable method of payment, and there’s no purchase protection. So keep cash payments to a minimum, saving it for low-cost pop-up expenses.

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