Time + Attendance

Why Manual Timekeeping is Costing Your Company

August 07, 2023

Manual timekeeping costs your business more than you realize, from processing errors to time theft. Manual timekeeping may seem simple, especially for small businesses, but it is inefficient. You must manually enter when an employee clocks in and out, then factor in break times.

You take that information and calculate the payroll manually or enter it into a spreadsheet. That all takes time. Now consider the other issues with manual timekeeping, such as miscalculations and time theft, and the losses add up quickly.

The True Cost of Manual Timekeeping

To correctly calculate payroll, you need accurate data. How reliable can data coming from a manual system be? Here are some ways it affects the bottom line:

  • Time theft – You must rely on employees to accurately report their time.
  • Inaccurate records – It is difficult to make an informed decision about budgeting if you have erroneous payroll or staff hour records.
  • Administration costs – Staff spends additional time troubleshooting payroll errors and making manual calculations.
  • Poor overtime management – It is easy for overtime to sneak up on you with a manual system.
  • Employee turnover – Employees may get more frustrated with a manual system because of errors

The loss companies incur due to manual timekeeping adds up.

How Payroll Errors Impact Your Bottom Line

Manual timekeeping increases the risk of human error, and that gets costly. Beyond over or underpaying an employee, you might also face:

  • Compliance error penalties
  • Interest charges on back-taxes
  • Civil and criminal sanctions with penalties

Payroll errors can affect employee morale, which means less productivity. There is an administrative cost to consider, as well. How much time does it cost you to figure out what is wrong, correct it, and then deal with the fallout of the error?

Inefficiencies of Manual Timekeeping

Manual timekeeping is inefficient, too. Let's say the entire process from check-in to check-out and calculating the total time worked during the day takes five minutes per day. That is 25 minutes each week and 100 minutes each month. You've spent almost a full day managing the manual time card in one year.

The work doesn't stop there, though. You have to do something with the time data you collect, like use it to figure payroll or manually enter it into a computer. That's another ten minutes a day or almost an hour a week.

What about mistakes? If you are calculating things manually, there are bound to be a few. When you find them, you have to figure out what went wrong. If you don't, chances are you overpay someone.

Time Theft and Its Impact

According to Robert Half International, employers lose about 4.5 hours weekly to time theft. That is money paid out but not earned. There is a loss with buddy clock-ins and outs — a friend clocks in someone who isn't at work or clocks them out long after they leave.

Time theft can also include longer breaks or unscheduled ones. Other types of time theft:

  • Inflation of the number of hours worked to get overtime.
  • Doing personal things during business hours, such as web surfing.
  • Time wasting

Recent data shows time theft costs businesses 11 billion dollars a year.

The Solution - Automated Time Tracking

In today's digital age, there is no reason even small businesses should rely on manual timekeeping. Automated time tracking is cost-effective and easy to use. This system utilizes geofencing and task metrics to increase productivity, produce accurate payroll calculations, and improve workflow management.

How Payday Payroll Can Help

Payday Payroll offers automated time & attendance solutions. With it, you get accurate time reporting, better control over the process, and precise data. You can use this data to make informed decisions about task allocations, budgeting, and staffing. The system automates payroll calculations, too. That means fewer errors and fewer compliance issues.

On the outside, looking in, it might seem like maintaining manual timekeeping is a cost saver. The truth is it costs more than you might think. You lose time and revenue that you could put towards a more accurate automated system.

Discover the benefits of Payday Payroll 

Cut costs significantly by simplifying your payroll system with Payday Payroll's automated time-tracking! Get in touch with us for a complimentary demonstration and consultation.

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