Is your business still using pen and paper timesheets to track attendance? If so, you are falling behind your competitors and losing more money than you know in the process. Using pen and paper timesheets will cost you much more in the long run if you don’t stay ahead of changing regulatory compliance demands – it might be time to switch to a time clock software!
While pen-and-paper time tracking is a cheap option, the amount of money you may be losing for payroll errors is incalculable. The American Payroll Association says that there is an error rate between 1 and 8% of total payroll for businesses that still use traditional pen and paper timesheets. Additionally, studies have shown that approximately 43% of workers admit that they have engaged in various types of time theft.
It is clear why most companies are making the shift towards time tracking software. Not only are there financial benefits but there are also other benefits that your business probably hasn’t taken into consideration. If you are not sure whether your company is ready to make the transition to time clock software, below is a guide to help you make an informed decision.
Meet Your Bottom Line
As a business owner, one of your main priorities is ensuring that your business is profitable and that you are meeting your bottom line. Business owners have to juggle a lot of different aspects of a company and often overlook the fact that their payroll is leaking money through numerous “holes” due to outdated technology. Switching to time clock software can make a drastic difference for small businesses.
1. Lower Payroll Errors
Although you won’t be able to eliminate all payroll errors, you can significantly reduce them by switching to time clock software – Especially if you consider that the average American worker states they must see an overpayment of $400 or more before they alert their employer of the mistake.
Payroll errors happen more frequently then you may think. According to the IRS, Approximately 33% of businesses make payroll errors, and as mentioned above those errors range between one and 8% of total payroll. Nearly 40% of small businesses receive penalty fees of $800 or more a year from the IRS for mismanaged payroll entries.
2. No More Rounding
While it may not seem like a big deal to round up a few minutes every day on your timesheet, if every employee is rounding up that time will add up quickly, eating into your payroll. According to the American Payroll Association employee time theft averages out to about 10 minutes per day per employee.
Unless you specifically tell time tracking software to round time, it won’t. When an employee punches times using time clock software, their punch time is captured down to the second. Time tracking software is a great way to guarantee that your employees punch time is being documented correctly and that you are paying them only for the time they are working.
3. Stop Buddy Punching
Buddy punching is when one employee punches time for another – it is another form of time theft. Employees who frequently a punch in or out for a coworker can drastically impact your payroll. The American Payroll Association states that over 70% of businesses lose money from buddy punching.
To put it into perspective, if you have 50 employees with an average payroll of $30,000, then the act of buddy punching costs you nearly $33,000 per year.
In a perfect world, employees would personally fill out their time sheets, but unfortunately, we do not live in an ideal world. Pen and paper timesheets that require employees to keep track of their attendance are typically the types of systems that are the most abused.
This is where time tracking software can significantly help. One of the significant advantages of modern time tracking software is the ability to limit how an employee can punch in or out. For example, many time tracking Solutions have biometric features such as facial recognition to ensure that employees are not able to buddy punch.
4. Accurate Billing
Time clock software doesn’t just help you better manage your employees work hours. It also helps businesses that bill by the hour. Reporting accurate billable hours can be crucial for a business’s reputation – especially a small one.
With time tracking software you can provide clients with down to the minute reports of the time worked, instilling trust, which will help to boost your brand. If you were still on the fence about transitioning to a time clock software, you are probably starting to see how it can be beneficial.
5. Beyond Time Tracking
Time tracking software is not only great for better managing your employees time, but most solutions come with a broad set of other features and functions as well. Most offer integration with payroll software so you can seamlessly transfer your employees hours. Some time tracking solutions also provide a scheduling feature so you can manage your employees shifts right within their system. There are a lot of time tracking solutions available so be sure to do your due diligence and find the best software to meet the needs of your business.
Managing the Middle
Switching to a time tracking software doesn’t only improve payroll accuracy and help your bottom line. Time clock software can save your management team a lot of time and in turn, save money for your business.
1. The Payroll Chase
Every payroll it is inevitable that management or members of Human Resources will need to chase down an employee who forgot to hand in their timesheet or recorded their time incorrectly.
By using time clock software instead of old pen and paper time tracking, you can significantly improve the time tracking and payroll process. The process can be made much quicker, more accurate and less time-consuming for all involved. The right time tracking solution can automate the process of confirming that timesheets are correct and submitted in time for payroll processing.
2. Keep Up To Date
As your business continues to grow, keeping track of your expenses is increasingly essential. Merely guesstimating what your payroll will be at the end of the week or a month just won’t cut it any longer.
Unlike traditional timesheets which stay in your employee’s possession or are hung up on the wall at your office, time clock software can help to give you an insight into your payroll balance at any point in time. Most time clock solutions have advanced reporting features so you can quickly run a report on various time periods and get a better understanding of what your future payroll will look like. This can help you plan ahead and ensure that you have the budget to cover payroll expenses.
3. Overtime Notifications
Leadership doesn’t have the time to be checking up on their employees constantly and their time worked. Not only is it frustrating for management do you have to micromanage their employees but it is also frustrating or employees if management is always looking over their shoulder. Manually having to check an employee’s timesheet to see if they are working unauthorized overtime is never fun and more importantly, can become costly.
With online time clock software, you can be notified the moment an employee reaches a certain amount of hours worked, whether on a daily or weekly basis. Often you will find that an employee just forgot to clock out which can be easily corrected.
Such time clock features will give you peace of mind knowing that you will be notified if an employee does work unauthorized overtime and can put a stop to it as soon as possible. Your employees will also be happier because they know the system will do all the monitoring resulting in less micromanaging by leadership.
4. Remote Workers
When you have employees that work out in the field or often visit a client on-site, communication with supervision is typically done by phone. To figure out where they are you only have the option of asking them and hope that they are honest.
With an online time clock solution, you can take advantage of features such as geolocation so you can pinpoint exactly where an employee is whenever they punch in or out. Some time clock solutions also offer more advanced features such as geofencing. Geofencing allows you to assign multiple locations to an employee and only when they are at that location will they be able to punch time.
An Employee Time Clock
Time clock software has several advantages over traditional pen and paper tracking for your employees as well. It is usual for some employees to resist any change. However, they will quickly see how useful an online time clock software can be.
1. Paid On Time and Correctly
Most employees do not enjoy the process of having to track their hours worked – this includes having to make timesheet corrections, submitting their timesheet for approval and having to go through a manager if there is an issue.
By using time tracking software employees can get their timesheets approved much quicker and can help to prevent any delays in payroll processing. Employees can rest assured that they are being paid correctly every time.
2. Employee Empowerment
When using the pen and paper time tracking system every so often an employee will get an unpleasant paycheck surprise. This can be especially difficult for employees when they plan their life and daily routine around their income. With an online time clock software, you can give your employees access to summaries of hours worked. Allowing them to have this access helps to build mutual trust and a sense of security in the employee-employer relationship.
The Risk of Not Switching
After going over the points mentioned above, it is obvious how a Time tracking software can benefit your business, leadership and also your employees. By not switching to a more modern time tracking solution, you hurt your bottom line, and in the long run, your business can suffer. Here are some additional points to consider.
While pen and paper time tracking is very cheap, the potential damage it can do to your business is not. The higher your payroll, the more of it you can lose due to errors, time theft, and unauthorized overtime. By investing in a Time tracking solution, you can lower monetary losses in payroll as your business continues to grow.
2. Keeping in Compliance
There are a lot of rules when it comes to the Fair Labor Standards Act such as having to keep attendance records for at least two years and that it be easily accessible in the event the government decides to audit you.
With time tracking software you can keep accurate historical records of an employee’s attendance and payroll. In turn, this will protect your business from any possible legal action if by chance an employee claims they were underpaid.
While staying on top of compliance demands can be an extremely daunting task, it is a crucial part of running a business. Rather than making the process complicated by using paper to track records, invest in a time clock that will sort all of that information for you. You and your employees can readily access it whenever needed.
Time to Make the Switch
Now that you have likely decided that it is time for your business to make the switch to an online time tracking solution, now comes the fun part of trying to find software that best fits the needs of your business. Every solution offers a different set of features and functionalities, so be sure to shop around!