5 Ways Timekeeping Automation Helps Business Owners Save Big
In today’s fast-paced business world, companies need access to all the best resources to automate processes and minimize manual efforts.
However, many small- to midsize business owners rely on outdated methods for collecting time and labor data from their workforces.
Understanding the critical advantages of timekeeping automation is the first step in saying goodbye to paper timecards and manual data entry for good.
Explore five benefits of automating time collection that can help your company keep costs down while maintaining compliance and ensuring payroll accuracy.
What is Time and Labor Automation?
Over the last few years, workplaces nationwide have undergone significant shifts.
Some companies went fully remote in response to the COVID-19 pandemic, while others established hybrid schedules.
Regardless of where your workforce is performing their tasks, you need a way to track hours worked consistently.
Relying on manual efforts, such as paper timesheets or a spreadsheet for entering hours, will no longer be sufficient with today’s shifting workforce needs and complex labor regulations.
Automating the processes is the best way to cut expenses and reduce the time spent managing employee hours.
Your team members’ efficiency will improve, and you can ensure compliance with all labor regulations.
Automating time and labor tracking refers to implementing a system that handles all the tasks associated with tracking hours.
Rather than requiring employees to track their own hours, they can clock in or out using the software, which will then take care of the rest of the work.
An automated system can fill out a virtual timecard, add the total number of hours during a pay period, and link scheduling details to keep everyone on the same page.
The Vital Importance of Tracking Time Data
Tracking employee time isn’t something your business can skip, particularly for workers who are paid hourly.
Monitoring and documenting the number of hours worked by nonexempt employees ensures accurate compensation.
Additionally, various laws apply to the number of hours worked, including maintaining eligibility for employer-sponsored benefits and taking a leave of absence.
One example is the Family and Medical Leave Act (FMLA), legislation that permits eligible employees to take job-protected leave to care for themselves and/or family members.
To qualify, an employee must have at least 1,250 hours of service with an employer over 12 months. But if your business fails to track hours, eligibility won’t be clear, and the organization could be in violation of the law.
Aside from the legal concerns associated with maintaining accurate time data, hourly employees must have correct timesheets to receive the right amount of pay.
Industries like retail, healthcare, hospitality, manufacturing, and food service often have many hourly workers, so an automated system for managing work hours is essential among businesses operating in these sectors.
Alongside these reasons, tracking time offers valuable insights into scheduling needs and productivity trends. Advanced scheduling options can ensure your business is staffed during peak hours.
Plus, the system can offer insights into employees approaching overtime to reduce costs associated with paying time and a half.
How Time and Labor Automation Saves Money
With a firm grasp on the importance of accurate timekeeping practices, you may be wondering why an automated system is worthwhile.
Many businesses across the U.S. rely on manual tracking and management methods, which might seem like the best option for smaller budgets.
But the reality is that automating these processes saves money immediately and over time.
Explore five ways that automated timekeeping will reduce costs for your business.
#1 Ensure accurate payroll
A study by Ernst & Young in 2022 estimated that the average company’s payroll accuracy rate is just over 80 percent.
For a business with 50 employees, this accuracy rate translates to payroll mistakes on approximately 9.5 employees. The study also revealed that fixing each mistake costs close to $300.
With that estimate, your business could spend over $2,500 correcting payroll errors, potentially every pay period.
That cost also doesn’t factor in the other risks associated with making mistakes, such as employee frustration and potentially higher turnover rates.
Payroll accuracy is one of the key advantages of automated timekeeping. With accurate time and labor data, you can be sure that every paycheck is correct.
Some platforms also include tools that allow supervisors and managers to review all the hours of data before sending it on for payroll processing, further enhancing the correctness.
#2 Prevent time theft
Time theft is a real problem that impacts companies of all sizes. This issue may occur by mistake due to incorrect addition or over-approximated clock-in times, or it may happen intentionally.
The American Payroll Association estimates that employees steal approximately 4.5 hours per week.
During a two-week pay period, that translates to 9 hours. Multiply those 9 hours by the number of employees you have, along with the average salary, and you can see how time theft can be costing your business.
If an employee is running late, they may also ask a co-worker to record their time so they can avoid being penalized or losing out on pay.
This practice, called buddy punching, impacts more than three-quarters of American employers. The APA also reports that companies lose as much as 7 percent of their total payroll costs as a result of time theft.
An automated timekeeping system minimizes the risk of time theft. Employees must clock in and out themselves, and clocks requiring a finger scan, facial scan, or other identifiers don’t allow buddy punching.
#3 Improve scheduling
Creating and maintaining schedules ensures that businesses have adequate staffing during peak times.
However, manual scheduling often leads to errors and confusion, potentially leaving your company in a lurch.
Schedule automation is an absolute must when you’re juggling the availability of multiple hourly workers while ensuring that every shift is covered.
You may also provide tools that benefit employees by automating the scheduling process. For example, a shift-swapping feature enables team members to make changes to their own schedules when necessary, taking the manager out of the equation.
#4 Lower labor costs
Reduced labor costs are vital in saving money; improved timekeeping practices can help you achieve that goal. One of the significant factors in a higher cost of labor is overtime.
According to overtime laws, eligible employers must pay covered, nonexempt employees at time-and-a-half their current pay rate for any hours worked over 40 during a workweek.
With time and labor tracking automation in place, supervisors can create schedules that reduce the risk of employees working more than 40 hours.
They can also monitor employees who may be approaching the OT threshold with automated alerts. The cost of labor goes down when your business isn’t paying unexpected overtime.
#5 Reduce human errors
Human error is a reality of manual processes, and such mistakes can cost a business a lot of money.
Finding ways to reduce the risk of errors is vital to keeping costs down, and automation is one solution.
Automated timekeeping takes the work out of the hands of humans, relying on formulas and pre-set rules to create data and run calculations.
Your business can say goodbye to the mistakes of the past, including the incorrect addition of hours worked, for improved accuracy on timecards and in payroll processing.
Wrapping up How You Can Save Money With Timekeeping Automation
Finding the right solution for your business ultimately depends on the number of employees and how you plan to track time and labor.
Opting for a system built with small business needs in mind can help you better manage your workforce while saving a lot of money.