6 Hidden Ways That Paying by Check Is Hurting Your Business Think the cost of paper checks is a cost of doing business? Ascend to the cloud, and take another look.

Even though the use of paper checks for business payments has been slowly declining, most U.S. companies are still using paper checks for 50 percent or more of their vendor payments. Those same companies, however, could be enjoying improved process efficiency and cost savings by cutting back on this practice and instead automating payments using cloud technology -- where savings are even bigger than most organizations realize.

Related: 25 Payment Tools for Small Businesses, Freelancers and Startups

According to companies and analyst firms that have done the math, the cost per check is anywhere between $3 and $5, depending on the organization. This breaks down to such line items as check stock, envelopes, ink, printers, postage and the time of the person doing the check-printing, envelope-stuffing and mail processing. There are additional, less transparent costs that take a lot of time to peel apart and understand.

Most organizations don't try to add up the obvious costs, let alone the hidden ones, because they see check-writing as a cost of doing business; other organizations don't believe they have any viable alternatives. While this was the case for a long time, today's technology means it no longer is.

When you wrap in the hidden costs of check writing, the ROI of automating payments is probably double what you thought. Indeed, there are at least six hidden costs that can dramatically drive up the true cost of check-writing, hurting your business in the process.

1. Payment errors

Payment errors are a big part of the accounts payable (AP) process. According to research by the Accounts Payable Network, payment errors affect on average 9 percent of payments. Error rates tend to be higher in industries where there are multiple locations, many small suppliers and high AP turnover. Chasing these errors down, figuring out what went wrong, recognizing where the money is and correcting these errors is a significant part of AP's workload. I've rarely seen anybody put a number on these costs.

2. Late payments

Working with paper slows down the AP process so much that it can be a struggle to turn around payments fast enough to avoid late payment fees and interest costs. But paying late can also cost you in terms of your relationships with vendors.

In industries such as construction, where you're working with many contactors and small vendors dependent on the timing of payment, consistently paying on time can set you apart from the pack and help you attract the best vendors at the best prices. Conversely, if you're perpetually late in paying, vendors will be more reluctant to work with you.

Related: Big Banks Make Online Payments Easier for Business Owners

3. Approval time

With paper checks, it's usually someone's job to walk the checks and invoices around the office for signatures. There's a cost to that person's time, but what about management's time? The general manager or department head that already approved the invoice then has to take a stack of paper invoices and paper checks, compare them, approve the payment and sign the checks. This takes up to anywhere from a few minutes to hours of management's time.

4. The cost of poor visibility

When you're writing a lot of checks, you don't have clear visibility into cash flow. You may make mistakes that result in overdraft fees and returned check fees. Or, if you're managing in a very tight cash-flow business, you may need to tap a line of credit more frequently to make sure you're covered; and there are costs associated with doing that.

5. Storage

Companies devote a lot of space to securely storing check stock and archiving past invoices and remittances. Some even rent storage space for the latter, incurring storage costs. Then there's the cost when you need to find a check. Somebody has to go to the storage space and locate it in one of those boxes. That's likely at least a couple hours of someone's time every time this happens.

6. Headcount and hiring

If your company is growing, and you're writing checks, you eventually get to the point where you're looking at hiring more people just to keep up with this manual task. There's the cost of that person's salary, taxes and benefits, and the time spent to interview and train. And there's also an opportunity cost, in that you're hiring for manual processes in accounts payable when you could be hiring for another, more strategic role.

When you think about these hidden costs, it's clear that check-writing is not only costing businesses money, it's costing them the ability to run those businesses efficiently and scale effectively. So, why have so few companies taken a hard look at these costs? The answer: for the same reasons that AP has barely changed in 50 years. In most businesses, everybody thinks about the revenue-generating side. Fewer people think about cost avoidance and efficiency.

In the case of older businesses, where people have been writing checks forever, they just don't think about these issues at all. After all, you have to pay people; and up until very recently, there have been no alternatives other than partially automated ACH or credit card programs offered by banks. If there's no alternative, why would you spend any time at all evaluating your costs?

In younger companies, however, where technology is part of the DNA, people are more likely to think, "There has to be a better way of doing this."

Related: What Payroll Schedule is Best for Your Business?

With today's technology, there is. Payment automation is one of the easiest things to implement and provides an immediate impact to businesses' bottom line. At your organization, you could literally transform the massive effort that goes into writing checks with a few hours of AP's time. There are very few technology implementations you can say that about.

Once that technology is implemented, organizations can make all their payments in a single automated flow, with visibility, traceability and control, freeing up a tremendous amount of money and time for other, more productive tasks. Considering this change, then, may be well worth your time.