5 financial benefits time tracking software should provide small businesses

Friday, June 24, 2022

You probably don’t think of timekeeping as a critical piece of your business’ finances, good or bad. But consider this: Time and attendance data shapes payroll, which is likely your biggest expense. And that expense affects everything, including your cash flow, profit margin and ability to secure credit.

Digital time clocks can help, but they’re not enough. You need employee time tracking software that empowers you to manage this with the care and attention it deserves. Sure, it’ll take time and money. But the reality is that it’s too important not to button up.

When you’re on the hunt for the best employee time tracking software, make sure it delivers on five key financial benefits. The right solution should:

1. Prevent over or underpaying employees

Does this sound familiar? You’re doing payroll and begin to see missing punches or timesheet entries. You have to track down employees and ask them to help you fill in the very literal blanks. It’s been days or weeks, so they can’t quite remember. You both leave frustrated and have no choice but to plug in a best guess.

Each time this happens, you’re potentially overpaying or underpaying your employees. Overpaying them is a problem for obvious reasons: You’re incurring a business expense without getting anything in return. It may not seem like a big deal the first few times. But with multiple shifts and employees, all of those guesses add up to a lot of wasted funds.

Solve this problem with employee time tracking software that quickly alerts you to missing punches and incomplete time cards. Look for a solution that makes it easy for you to notify employees of missing punches and even easier for them to correct errors. The right system will also enable you to see and approve any employee changes before they take effect.

2. Lessen timekeeping fraud

Employees accidentally forgetting to clock in or out is one thing. Employees deliberately stealing time is another. Time theft is a form of attendance fraud and unfortunately, it’s pretty common. Up to 19% of employees report engaging in some form of time theft.

So what does time theft look like? It can take many forms: employees putting in a timesheet entry that shows them coming back earlier or leaving later than they actually did. “Buddy punching” is another classic example in which one employee clocks in another employee - who isn’t at work yet - to keep them from appearing late. Or on the flip side, an employee might ask a friend to clock out for them at the scheduled time while they duck out early.

To help prevent fraud, you need employee time tracking software that makes it tough for employees to submit false information for themselves or one another.

Consider a solution that allows employees to log their time through PIN-punch or facial recognition software via their own mobile device. It’s critical the solution you choose also allows you to set geographic perimeters and enable managers to see when employees attempt to clock in outside of it.

3. Manage overtime costs

When you pay employees time and a half, you are essentially paying them at a premium rate. Are those employees doing a premium job on tasks that will really move the needle for your business? Or is that premium rate paid haphazardly, to whomever decides to earn it doing whatever they do?

With traditional employee time tracking methods, it can be hard to know. But knowing is crucial to running a successful business. Not only because it affects your labor costs, but because wage and hour compliance is important.

Most small businesses must pay overtime to eligible employees. Some exceptions exist for companies whose annual gross volume of sales or business done is less than $500,000. However, just because your business may not be covered doesn’t mean your employees aren’t. They may be entitled to labor law protections as individuals based on the type of tasks they do and the number of hours they work.

And that’s just a brief overview of federal law. Businesses must also follow both state and municipal law.

The right digital system can turn overtime from an unplanned expense into a powerful strategic tool. Choose employee time tracking software that automatically calculates overtime as you build schedules. That way, you can see which employees are likely to earn overtime and adjust shifts, ensuring that time and a half pay goes to employees working on the most important jobs.

The best employee time tracking software should also alert you or your managers when employees are approaching overtime. You can make quick, informed decisions about who to cut and when to cut them. The right solution ultimately empowers you to proactively manage your overtime costs instead of just letting them happen.

4. Easily process error-free payroll

Buttoning up your time keeping and management practices won’t amount to much if timekeeping data isn’t correctly entered into payroll.

Choosing employee time tracking software that seamlessly integrates with your payroll system is the best way to secure accurate payroll. If it doesn’t, you run the risk of introducing inaccurate time data. Why? Because whenever information has to be manually copied from one place and entered into another, mistakes are likely to happen.

Not only does re-entering information increase the likelihood of errors, it creates an unnecessary administrative burden and exposes your business to a greater tax liability. According to Business 2 Community, 40% of small businesses end up with Internal Revenue Service (IRS) penalties due to payroll errors.

So while it might feel like you’re saving money by not adopting a digital time tracking solution, you may just be paying the same amount in lost employee time and unnecessary penalties.

When you look for employee time tracking software, make sure that it integrates with your payroll system. Ideally, your timekeeping and payroll tech should share information automatically, effectively eliminating data entry and the risk that goes with it.

5. Attract talent via flexible scheduling

Depending on your industry, raising wages to compete against big stores with even bigger pockets may not be an option. But that doesn’t mean you can’t attract the talent you need. While pay is important, some employees really value flexible scheduling and autonomy over their shifts.

Attempting to do this without technology could unleash chaos on your business. But with the best employee time tracking software, it’s possible. Even easy. Choose a solution that allows employees to view their schedules on their mobile devices and request shift changes. Managers should be able to approve or deny those requests with the click of a button, anytime from anywhere.

Not only does this give employees the freedom they want, it makes them wholly responsible for their schedule. Fulfilling their shift - whether they choose to do so themselves or swap with someone else - is up to them.

In addition to giving employees the ownership they want, it frees your managers from bearing the entire burden of staffing and scheduling. Which is good, considering that more than half of managers spend over three hours per day on administrative tasks and 44% of them report feeling overwhelmed at work.

Other important factors to consider

In addition to everything we’ve covered, the best solution should also:

  • be inexpensive and easy to maintain
  • easily integrate with the technology you already use in your business
  • come from a provider with a proven track record and a solid foundation
  • provide customizable options, so you get everything you need and nothing you don’t

Customer service is key

You and your team need a partner you know will be there to support you; someone who is invested in your success. You don’t have to sacrifice that kind of personalized service in favor of powerful technology. You can have both.

In addition to the key benefits we described above, the best employee time tracking software should provide a dedicated specialist who knows your business and an on-call team of HR experts who can help you every step of the way.

When it comes to choosing the right employee time tracking software for you, there are a lot of choices. But not all of them are built with small businesses in mind. If you want to do a bit of research on your own, you can learn more about Heartland’s timekeeping and payroll tools here.

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