Best Practices in Time Tracking for Payroll
Let’s face it: tracking time is stodgy, administrative work. It’s a necessary evil we endure in order to run an efficient and profitable business, but it’s not fun or exciting. However, in spite of its mundane nature, time tracking is often one of the most consequential administrative functions a business performs. After all, that’s where all the money is, and if you’re not doing things the best way, that’s also where you’ll find unnecessary costs, inefficiencies, and other liabilities.
Keeping accurate information gives a business additional insight into productivity, attendance, finances, and other areas. Following best practices can also improve worker morale and insulate businesses from legal and regulatory exposure. Best of all, implementing good business processes saves money –- and when it comes to tracking time, lots of money.
There are many things that owners can change that require little effort, yet yield excellent results. Here are some time tracking tips from the pros:
Create and Implement Good Policy
Most employers overlook the importance of creating a written, well defined policy until it’s too late. The lack of time tracking policies can lead to confusion among employees and managers, feelings of jealousy or favoritism, and even significant legal problems. To avoid pitfalls, time tracking policy should be clearly defined in writing and included in the employee handbook or easily available to your workers.
Most employees don’t keep up with labor laws but employers are required to post information that helps workers stay informed. You should create policies that employees can follow easily and make sure they don’t contradict your legal responsibilities. If applicable to your business, it’s also advisable to document your time-off policy.
If it Ain’t Broke… Automate
According to the American Payroll Association, nearly 29% of payroll professionals use time tracking systems that are over 10 years old. This is probably because most businesses are used to their existing functionality and they don’t want to take the time to invest in other solutions. Although old time tracking systems might not necessarily be “broken” per say, there’s a good chance that they are no longer the best solution for the business. In fact, companies that lack modern, automated timekeeping systems have an average 8% error rate on their payroll. When mistakes are made, employees are not paid correctly and businesses risk penalties from the IRS.
Automated time tracking solutions like this one leverage today’s web technologies and solve many old problems. They eliminate payroll errors and allow companies to accurately bill more hours. Prices and features vary widely, but there are many choices in the marketplace and even uncommon features can be located without too much difficulty. Resist being complacent just because you’re comfortable with the status quo. In the end, that comes with costs. Instead, evaluate what you need in a system to meet today’s requirements, and then look for a solution that meets those needs.
Simplify Everything You Can
There’s never a bad time to simplify your life, and that’s true for your business’s time tracking policies as well. Look for areas where things seem specifically overly complicated and don’t be afraid to ask yourself why things are the way they are. Often times, time tracking policies were created when businesses had different technology, different customers, different costs, and so on. If policies, procedures, and even vendors are no longer optimal, then they should be jettisoned or upgraded to meet current conditions.
For example, many businesses have unnecessary overtime policies. They create their own internal business rules like paying overtime on weekends or holidays. Some create overtime policies like these where they pay overtime on future checks, incorrectly substitute overtime for compensatory time, or even fail to pay workers their correct overtime amounts. Often, these homemade overtime rules can exceed legal requirements but there are still many who aren’t compliant with the law. In either case, these kinds of issues leave business owners with either inefficient or legally exposed operations.
Get it on the Schedule
Time tracking policy is often an afterthought for many business owners who are generally more focused on finding customers and meeting their needs. That’s why prioritizing time tracking policy reviews are generally the biggest challenge owners face -- even more so than making actual policy adjustments. Making changes is easy when you have the time and will power to do so. Don’t put this off if it’s been a while since you last evaluated your time tracking strategy. You will likely end up with streamlined operations, improved morale, and lots of savings.
Joel Slatis is the Founder and CEO of Timesheets.com. He began his career as an engineer who then found himself developing websites for well-known brands. He later founded Timesheets.com, which focuses on helping many small businesses reduce payroll costs and increase billing. With over 15 years of experience in time and expense tracking, Joel uses his knowledge to educate others and focuses on developing solutions to enhance the time tracking experience.
Timesheets.com launched in 2004 by a small team of Silicon Valley web developers determined to create a solution to their own time tracking needs. Over 15 years later, Timesheets.com has grown into a profitable global enterprise with thousands of satisfied customers across the US and beyond.