If you are a small business owner payroll and tracking employees’ time can be quite the task. You may be spending a lot of time calculating all of your time cards so everyone is paid accurately. By manually tracking hours worked, it raises the opportunity for errors when trying to stay within a payroll budget.
Did you know punch rounding is costing your company money?
Punch rounding is an easy method when tracking and adding up timesheets. Unfortunately, this time tracking style can also put your company outside its payroll budget. Let's use the example of an employee punching in 7 minutes late and you round their time down as starting the hour before the 7 minutes. That is 7 minutes the company just lost to begin the day.
Next, we will assume that the same employee punches out 7 minutes before the next quarter of an hour and you round their time up. This is an additional 7 minutes lost which puts a total of 14 minutes per day of paid time that was never worked. If this employee works 5 days per week, then we would simply multiply the 14 minutes by 5 days to see that 70 minutes, or an hour and ten minutes, of time, was paid to an employee when he or she did not work for that time.
But does it stop here? Think about how many weeks are in a full year. One hour and ten minutes of time per week multiplied by 52 weeks (total of weeks in a year) are 60.67 hours of lost time for only one employee. If this employee makes $17 per hour, then your company lost a minimum of $1,031.39 for the year. You will notice this number is not the highest, but remember this is just one employee that is being used as an example.
What’s that you say, you have 7 employees? Well, take $1,031.39 and multiply that by seven and you will definitely see how much money the company is losing by using the punch rounding technique when it comes to tracking your employee’s time.
How to better track employees’ hours worked
Online employee time clocks are the new and modern way for employers to have 100 percent accurate time cards. OnTheClock is an employee time clock company that allows employees to punch in and punch out, generate accurate time cards so they can be exported to a payroll provider.
Punch times from employees are recorded and saved in an internet-based system so employers can conveniently access their accounts from anywhere in the world with an internet connection. This has allowed over 15,000 OnTheClock customers to gain peace of mind when they are on vacation, simply on the go or if they just want to take the day off. Stop worrying about who is on the clock working when you can simply check from a desktop, laptop, or mobile device and see who’s in.
Benefits to using an online employee time clock
Reduce payroll expenses
Entrepreneur.com reports that payroll mistakes can cost approximately $4 to $9 each pay period. This may not sound like a lot of money, but depending on the size of your company and adding that up over a few years, then you can see how this little amount becomes a really big amount. An online time clock allows payroll providers to easily create accurate paychecks by spending less time doing so. And since the time cards are calculated to the exact minute, it will ensure a small business stays within the payroll budget.
Have accurate documentation in the event of an audit
Although many business owners may think it will never happen to them, you never know when an audit may be performed on your company and you are asked to provide specific documents. The Department of Labor could be an organization that may request proof of employee hours worked. The last thing you want to do is be left looking like a deer in headlights on this one. Play it safe and track employee hours properly and give yourself peace of mind.
Prevent buddy punching
Buddy punching occurs when an employee punches in or out another employee that is not present or working. Ultimately this results in time theft which is equivalent to employees directly stealing money from their employers. According to a 2017 report by HR Daily Advisor, buddy punching can cost United States employers an estimated $373 million annually.
Conclusion: What should small business owners do to increase accuracy for employee time tracking?
It would probably be worth your time to sign up for a 30-day free trial with an online time clock system to see if it is something that fits your company’s needs. What do you have to lose by doing so? The answer is actually nothing other than a minute or two to set up your account. Just remember that tracking your employees’ hours worked can only help improve your company and save you from paying more than you should.