Why Use An Automated Time Clock Software

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Why small businesses should switch from a manual payroll system to using automated time clock software, using biometric or RFID technology.

If you own a small business or work in payroll, you have likely encountered the problem that many companies hope to have: how to keep track of an expanding workforce. Calculating the hours of one or two people may not be difficult, but as the number of employees working for your company grows, so too do the headaches of tracking time each day, week and month without automated time clock software.

The issues associated with tracking payroll are exacerbated by the use of manual time clock systems, such as punch cards, which at this point are outdated enough to actively harm your bottom line. An estimated 40% of small businesses still do their payroll manually, wasting valuable time, energy and resources in both the short and long-term.

Considering that the average professional services business loses over $110,000 annually due to poor time tracking, the decision to upgrade appears to be an easy one. Yet countless entrepreneurs and HR employees likely consider an upgrade to an automated time system to be an unnecessary expense. A comparison of automated time clocks, which can be integrated into existing payroll systems, with manual time clocks shows that the return on investment can be enormous.

Accuracy

For decades, one of the most common ways to track and collect hours was to have employees do so themselves. According to a study by AffinityLive, not even 50% of workers who fill out their timesheets “multiple times a day” could say that their hours were “very accurate.” Filling them out once a week results in just over 25% of workers having supreme confidence in their calculations. Remembering what you’ve done over the course of a day, week or even longer is not a suitable method if accuracy is the goal.

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Even punch card systems, which ostensibly track when employees clock in and out each day, has its flaws. Time theft, intended or otherwise, is a very real issue with punch cards. One form of time theft is buddy punching, where an employee will clock in for a colleague who hasn’t actually arrived at work yet. U.S. companies are said to lose an incredible $400 billion a year in lost productivity thanks to time theft and loafing.

On the other hand, automated time clock systems all but eliminate accuracy errors and time theft. Biometric time clocks, which use employee fingerprints or other individual identifiers in order to clock in, make buddy punching impossible, and your system will have a running log of clock in, clock out and break times that can be accessed at any time. No more asking employees to wrack their brains for what are sure to be inaccurate, inexact arrival times, and no more rounding up and down of a few minutes each day, which over the course of a year, can add up to a substantial loss.

Efficiency

As noted above, employees spend far too much time filling out timesheets in a manual system. The added responsibility of tracking their own hours can take up hours each month in and of itself. That task grows bigger and more complicated if a timesheet is lost and needs to be replaced, or a punch card is forgotten at home and the employee needs to track down a manager in order to override the system and start their day.


Related Article: 7 Ways an Outdated Time and Attendnace System is Costing Your Small Business Money

Furthermore, those who work in HR and need to complete payroll each month often need to devote many hours, if not days, to the process of compiling, calculating and finalizing the hours of each employee. The rush to process everything by deadline often leads to data errors and unneeded stress for those tasked with getting the job done.

Automated time systems don’t have timesheets or cards that can go missing, and allow payroll departments to pull management reports with ease. These reports allow both employees and employers to check hours, allocate vacation and make manual additions if need be. As a result, some companies have seen the time needed to complete the payroll process cut by about 70%.

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Sustainability

With manual time clock systems, businesses are forced to invest in timesheets, punch cards and other paper products that are a drain on both the bottom line and the environment. The average American office employee uses 350 pounds of paper each year, a wholly unnecessary waste. Additionally, consumers care more than ever about buying from companies with sustainable practices, meaning those who are known to use outdated, wasteful methods will be behind the curve.

With a quality time clock system that uses biometric technology, not only will companies save money by reducing the amount of paper and other products needed to keep up with manual payroll, but they can reap public relations benefits by touting a green workplace. The amount of paper needed at the office will drop dramatically without the need to print replacement punch cards or payroll time sheets.

Legality

An unfortunate side effect of manual timesheets is the margin for error, which can come back to haunt businesses from a legal standpoint. According to the IRS, 33% of employers make payroll errors, which is a mistake that does more than inconvenience and annoy employees: The money you withhold from employees to pay taxes must be properly deposited and filed, and failing to pay the correct amount can lead to audits and fines. You may also run afoul of federal wage and hour compliance if your payroll numbers are off, which includes everything from incorrect overtime wages to deductions for wage garnishments. Employees can and will file suit against a company they felt underpaid them as well.

Automated time clock software virtually eliminates these possibilities, creating a digital record of when employees clock in and out so the record remains clear. Having these records can be crucial if an employee files suit or the Department of Labor audits your business and considering there has been a 400% increase in the number of Fair Labor Standards Act lawsuits since 2000, having the means to cover your back is now essentially a requirement.

The differences between a manual and automated time clock system and software are clear, especially if your company is one of the 46% of respondents to a recent poll saying they did not have an accountant. Payroll can be a hidden killer for small businesses, and it would be a shame to let it hinder what could be a successful, necessary and profitable company otherwise.

What are the different ways implementing automated time clock software would help your company to save time calculating employee time and attendance?

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Paul Trujillo

Paul Trujillo

Paul Trujillo is a Product Marketing Manager at Informatics specializing in Inventory Warehouse Management and Supply Chain product lines. His nearly 15 years of experience has put him at the forefront of industry technology and developing trends.