How to avoid costly payroll mistakes with accurate time tracking

Let’s face it…

Running a small business is no walk in the park.

Alongside everything you must do (marketing, customer service, hiring, onboarding, etc.), accurately tracking your employees’ time can drain your resources.

Depending on what type of business you own:

• Home and repair
• Medical office
• Cleaning service
• Construction
• Staffing and others

They require all business owners to have accurate time tracking and scheduling to keep track of employee hours for coverage and, more importantly, payroll. 

That’s why accurate and hourly time tracking is so essential 🎉! 

It’s not just about saving money; it’s a game-changer that reduces stress, improves employee turnover, and sets the stage for a more efficient and successful business. 

So, buckle up as we uncover the benefits of precise time tracking for your business.

Manual time tracking = higher costs

Manual time tracking, relying on paper timesheets, digital spreadsheets, or physical timecards, might seem like the traditional approach. However, the hidden costs associated with these methods can be substantial. 

Employees are responsible for filling in or punching in to track their worked hours, leading to a time-consuming process prone to errors.

According to Software Advice, 43% of employees exaggerate how many hours they work, which means that you, as an employer, are paying for time they’re not working. 

While manual time tracking might work for your business today, these issues can occur intentionally or unintentionally, contributing to a significant resource drain.

Buddy punching costs US employers

$373 million annually

Via Workforce Hub

Buddy punching is a drain on resources

Buddy punching, a subset of time theft, occurs when employees intentionally manipulate clock-ins or clock-outs for personal gain. 

This type of employee time theft can lead to substantial financial losses for all small businesses. Buddy punching and employee time theft is very active in small businesses. PPM Express and Software Advice research shows that it affects 4 out of 5 small businesses. 

And even more, 56% of small business owners say they find errors more than 25% of the time when checking employee time sheets.

To put this into a macro perspective, according to Workforce Hub, buddy punching costs US employers $373 million annually.

Now, imagine how this may affect your small business.

Payroll errors lead to costly mistakes

Manual data entry for payroll often results in errors, with almost 33% of employers making payroll mistakes due to this outdated method. 

These errors, whether from employee timesheets or input mistakes, can cost businesses 1-8% of their payroll.

For a small business with ten employees earning an average of $50,000 annually, payroll errors could result in losses ranging from $5,000 to $40,000 yearly.

40% of small businesses incur an

average of $845 annually in IRS penalties

Via American Payroll Association

Time tracking mistakes and the impact on small businesses

Recent statistics highlight the profound impact of mismanaged payroll processes on small businesses:

• 40% of small businesses incur an average of $845 annually in IRS penalties due to blown payroll processes (American Payroll Association).
• 33% of employers make payroll errors, resulting in billions of dollars in losses annually (IRS).
• 1 out of 5 employees participates in time theft, costing companies up to 7% of their gross annual payroll (Software Advice).

Upgrade to mobile time clock software for better time and attendance

The real game-changer comes with embracing modern time-tracking solutions (like Fingercheck) that offer the all-in-one type of benefits for small businesses:

Eliminating buddy punching: Time tracking solutions often incorporate features like employee photographs and geofencing, ensuring that clock-ins and clock-outs are genuine, thus minimizing the occurrence of buddy punching.

Reducing payroll errors: Automated time-tracking apps centralize hours and facilitate easy payroll processing, significantly reducing the chances of errors associated with manual data entry.

Environmental and cost savings: By adopting digital document management systems like time-tracking apps, businesses can contribute to environmental conservation by reducing paper usage, saving ink, and minimizing the need for physical printers.

Ensuring compliance: Staying compliant with labor laws is crucial for businesses. Time-tracking solutions help accurately record employees’ work hours, aiding in compliance with local, state, and federal regulations.

Automating tasks: Time-tracking solutions often offer features for automating repetitive tasks, from scheduling to payroll processing, streamlining operations, and saving time and money.

Automate your payroll

and hourly time tracking

See Fingercheck

Fingercheck recommendations:

1. Choose an automated time tracking solution: Opt for a time tracking software that is automated and integrates seamlessly with other business functions.
2. Track Hours Daily: Make time tracking a daily practice, ensuring more accurate entries and better compliance.
3. Maintain Consistency: Enforce consistency in time-tracking policies and systems across all employees.
4. Clear Instructions: Provide clear and concise instructions for employees to ensure seamless adoption of the new time-tracking system.
5. Simplicity for Employees: Select a user-friendly time-tracking solution that simplifies the employee process, encouraging widespread adoption.

In a nutshell, the perks of precise time tracking go way beyond managing payroll. When businesses understand the concealed expenses tied to manual methods, they can smartly opt for modern time-tracking solutions.

These solutions don’t just cut costs; they pave the way for a more efficient, compliant, and environmentally conscious business.

As you dive into another year of steering your small business, take a moment to appreciate the transformative impact of accurate time tracking. It’s not merely a tool; it’s an investment in securing the future success of your business.