How To Rectify Overtime In Job Costing

By Ben Douglas
May 20, 2022

Numerous businesses have implemented “job costing” reports as part of their monthly accounting to monitor the costs and profits of each job that the company takes on. This can be a helpful tool in calculating exactly how profitable or costly each project is.

Yet there is one potential thorn in the side associated with job costing: what to do about overtime pay. If overtime hours are inaccurately attributed to the wrong job, that job can look as if it was not so profitable, and that’s a problem.

The Challenges of Overtime

Overtime pay is the money a worker receives for performing extra hours, usually anything that exceeds the typical workweek of forty hours. Overtime mainly manifests as “time and a half,” or a rate of 1.5 of the regular hourly pay a worker earns.

The troublesome issue with overtime regarding job costing came when the additional hours worked counted for one day. How can this happen? If, for example, an employee works ten hours per day for four days (starting on a Monday), they will have met their weekly quota of forty hours (by the end of Thursday).

So that means all the hours worked on that fifth day (Friday) will count as overtime. With job costing, if a new job starts that Friday, then it will appear as if it’s very costly to the employer. To rectify this, the figures will have to be updated manually. This can be tedious and grueling and can also result in human error, and then numerous stats associated with the project may be inaccurate.

The Overtime Workaround

There is a straightforward solution to this overtime dilemma: having a system in place that automatically accounts for overtime within the job costing framework.

The Fingercheck platform utilizes a sophisticated software matrix to solve and prevent such job costing miscalculations. When the parameters of each position are put in place, Fingercheck’s software automatically syncs all costs and payouts, including heretofore problematic overtime funds. Contact a Fingercheck representative today for a detailed explanation of this and learn how to simplify and modernize all your payroll and HR needs.

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