New Zealand accounting software provider Xero Ltd. said today it plans to acquire Israeli fintech company Melio Solutions Inc. for $2.5 billion in a cash and equity deal.

Founded in 2018, Melio provides a digital payment platform that is designed to simplify business-to-business transitions for small and medium-sized businesses. The company’s platform allows businesses to manage accounts payable and receivable via an easy-to-use interface that also offers flexible payment options that help businesses optimize cash flow and improve vendor relationships.

Melio provides multiple payment options, including ACH bank transfers and credit card payments that allow businesses to pay vendors even if the vendors don’t accept credit cards. The idea here is to support businesses in managing cash flow more effectively by letting them choose the most convenient payment method for their needs.

The company’s platform integrates with existing accounting software, including QuickBooks, to make it easy for users to keep their books updated. The Melio platform also offers an approval workflow feature that gives teams the ability to add multiple approvers, customize approval rules and reduce errors in the payment process.

Xero said the acquisition of Melio will accelerate its global aspirations and solve a critical customer need in the U.S. by uniting accounting and payments in one platform for customers.

“Adding Melio’s world-class team, technology platform and innovative A/P solutions to Xero enables a step change in our North America scale and the potential to help millions of U.S. SMBs and their accountants better manage their cash flow and accounting on one platform,” Xero Chief Executive Sukhinder Singh Cassidy said in a statement. “Xero and Melio are highly complementary — together they complete the key jobs to be done for U.S. SMBs, extend reach across customer segments, provide both direct and syndicated offerings, and deliver multiple revenue drivers.”

Coming into its acquisition, Melio had raised $638 million over six rounds, including a round of $150 million on a $2 billion valuation in October. Investors in the company include Fiserv Inc., Accel Partners Management, Bessemer Venture Partners LP, Coatue Management, Frontline Ventures Ltd., General Catalyst Group Management, Latitude Ventures LLP and Thrive Capital Management.

Image: Melio