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The Cost of Manual Timekeeping: 7 Ways it's Hurting Your Bottom Line

by Brad Johnson on July 10, 2019
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Accurate timekeeping is undoubtedly one of the top ways to ensure your company’s financial health. Small errors, even those that affect several dollars each week, can accumulate into a significant loss in just a few months. Though manual timekeeping has served companies for years, our digital world provides a much more professional and succinct solution to tracking employee compensation.

SwipeClock-mobile-time-keeping-app-for-subsWhen employee’s hours are properly documented, reported and paid without error, both the employer and the company build a basis of trust in one another. Without this trust, turnover rates increase. The American Payroll Association reported that nearly half of employees will leave a company after just two payroll errors. Automated timekeeping builds a sense of security, increases accountability and supports overall company morale.

 

How Does Manual Timekeeping Affect Your Business?

The days of pen-and-paper simply do not offer the benefits and security of digital timekeeping. With room for error comes the risk of losing money for your company. Let’s dive into all the ways manual timekeeping could be costing you money:

  1. Human Error
  2. Administrative Time
  3. Time Theft
  4. Morale and Accountability
  5. Overtime laws (Labor Law Compliance)
  6. Correcting Errors
  7. Turnover and Hiring Costs

It isn’t always easy to change what seems like a working practice. Countless small companies still require employees to write their hours in a notebook or punch into a manual timecard system. Labor is one of the largest expenses in a company’s budget and small errors can significantly shift a budget over time.

 

  1. Human Error

Computerized timekeeping decreases the opportunity for simple human error. For example, an hourly employee in a busy retail store writes the wrong number and hurries out the door at the end of the day. If not caught, this could lead to incorrect payment, overtime compliance issues and time spent tracking down how and why the error occurred.

Errors occur farther along in the system as well. A shift manager reads and reports a timecard incorrectly after sorting through a dozen or so timecards. The issue won’t come to light until the employee receives their paycheck. Each time the handwritten information transfers from one person to the next, the possibility of error grows.

An automated system allows employees to swipe into a system when they arrive, swipe out when they leave, and report breaks down to the minute. There is no question of whether they read or reported the time incorrectly. This system also eliminates human error when the manager reports and tallies hours for paychecks.

 

  1. Administrative Time

Manual punch cards require more administrative upkeep, whether recording the handwritten times themselves or reporting errors. This lost time means a further loss of money. If the majority of a manager’s time is taken up facilitating handwritten timesheets and contacting employees with questions, they have less time caring for growth-focused tasks for the rest of the company. Should an employee enter their time incorrectly in a hurry, correcting the mistake could hold up the payroll process.

 

  1. Time Theft

The practice of “buddy punching” is far more likely when using a manual system in your company. In this practice, employees will ask their coworkers to punch them in or out after they’ve left or when they take a longer break than allowed. Even if employees change their times by five minutes each day, this can add up to hours of paid, unworked time over a month. The general practice also encourages a deeper communication issue between the team of employees and their managers.

 

  1. Morale and Accountability

Building trust in a company’s timekeeping and payroll system goes both ways. When employees fully understand your timekeeping system and see its dependable results, they can better focus on their work. The digital check-in system also sets a clear standard on when employees are on the clock and off, boosting focus, energy and overall morale. With a clear method of tracking each employee’s habits, it’s much easier to discuss ongoing tardiness or missed shifts if problems should arise.

 

  1. Labor Law Compliance

Both federal and state laws vary by industry for rest breaks, overtime hours and length of shifts. Should the company come under scrutiny for following these laws, an automated system allows the company to provide clear accountability for properly meeting standards. A manual timekeeping system requires significant administrative time to do so. This distracts administrators from more pressing matters and increases the chance of error when reporting hours for compliance.

 

  1. Correcting Errors

No matter how a timekeeping error occurs, finding where the issue began takes up precious resources. Timekeeping software can clarify where the change happened or even catch it before it affects payment to employees. Whether the error flags a labor law compliance issue or a payment error, it could take hours to sort through handwritten details to find where an employee or manager confused their math.

 

  1. Turnover and Hiring Costs

Employee frustration grows with each payroll error. If errors send employees seeking a company with a more dependable system, this leads to greater costs related to turnover and hiring. The Society for Human Resource Management estimated that hiring a new employee costs a company an average of $4,129 and that it typically takes around 42 days to complete the search. When employees trust your system, they grow a lasting relationship with the company. This leads to less money spent on training and an overall enthusiasm within your team.

 

Benefits of an Automated Timekeeping System

Companies can save a significant amount of time and money transitioning to an automated timekeeping system. For example, trim up to five minutes of administrative time per timecard by making the switch.

In addition to avoiding errors, automated timekeeping allows you to keep track of accumulated PTO without the additional legwork. A quality timekeeping system also automatically tallies payroll for each individual worker, naturally incorporating specialized shift paid or overtime payments.

Most importantly, automated timekeeping frees up every employee’s time to focus on the customer experience or developing the product. Payroll managers can spend less time fixing errors and catching issues like buddy punching and employees can hone their energy toward their customer-facing job, as opposed to worrying about receiving correct payment.

A company that correctly compensates its employees and adheres to labor requirements builds a culture of confidence with its employees. There is no need to risk this trust through an outdated system. Switching to automated timekeeping saves both time, money and the reputation of a company.

Topics: automated timekeeping