Inaccurate Time Tracking Could Be Costing You

image of clock faces moving forward into infinity of inaccurate time tracking

Think your business can't afford modern time tracking solutions? What you don't know could be costing you.

Wondering where you can find extra money in your business? You may not have to look any further than your time clock. Yes, your business could be leaking money due to poor or nonexistent employee time tracking.

The facts

Paul Sedlak, Vice President of Business Development for ADP's Small Business Services, explains that time theft is when "employees report time they may not have worked." For example, "they're supposed to start at 8:00 a.m. but punch in at 7:30 a.m., go grab their coffee, grab breakfast and then report to their desk at 8:00 a.m.. That's one mechanism of time theft, but it can get padded on the back end, too."

Another mechanism is "buddy punching," where one employee clocks a buddy in earlier or later than they actually worked. Buddy punching is "more common than we would want," Sedlak says. "For the most part, people are honest, but you always have that bad apple. Usually, the last people to know are the supervisor and manager, then everyone starts building distrust as it gets around among the employees, and it causes resentment. So, the whole impact of buddy punching is one, cost to the business owner, and two, good employees get ticked off which negatively affects your culture.

Why it matters

"There are a multitude of reasons why [employee time tracking] is important," says Sedlak. "First is managing and containing expenses. Clients in the small-business community who use electronic or software-based type of attendance tracking solutions typically save one percent of their annual payroll, which pays for any type of time and attendance platform."

"Second, you don't want to mess with employees' pay, right? They're the face to your customers. If you have 10 employees and two are unhappy, that's 20 percent of your capacity, so the impact of your employees' dissatisfaction with inaccurate pay can be traumatic to your business."

Third is compliance. The Fair Labor Standards Act dictates federal wage and hour requirements, but there are also wage and hour rules at the state and local level that can vary, "so you've got to be cognizant of those," warns Sedlak. Employers can use time tracking to help ensure that their employees are being treated in accordance with the law. Failure to compensate employees for all hours worked, such as overtime, or working off the clock, could lead to employee administrative complaints.

What you can do

"People now have the ability to punch in and out on mobile devices," says Sedlak. "Mobile devices are clearly ubiquitous now and are good at authenticating employees."

To mitigate erroneous timekeeping, geofencing and georestriction features also exist. These prevent someone from waking up late and simply reaching to the bedside table for their device to punch in. There is also a geolocation feature where the application only allows someone to "punch in" within 50 feet of the building by the business owner simply entering in their building address. This can be "accurate within one or two feet, depending upon your cell coverage."

For those with mobile workforces, an application called "GPS capture" can record GPS locations to verify that team members punched in at approximately the correct address.

Then there's geofencing. "If your device enters a work zone," Sedlak explains, "it'll automatically punch you in. If you walk outside that zone, it automatically punches you out." Employers who opt to use geofencing and/or georestriction features should be mindful of any applicable employee privacy rules.

Lastly, many business use point of sale (POS) platforms to place orders, enter transactions, and take credit card or smartphone payments. Many of those have their own timekeeping solution for employees to punch in and out. ADP has direct integrations with the most popular POS platforms or ADP can provide the timekeeping solution on your POS to process your payroll timely and accurately.

Many business owners believe they can't afford time tracking or just don't need to track time, but the reality is that it's too costly not to in actual dollars and in risk. There are affordable solutions to fit your business. There is a better way.

Learn about time and attendance solutions from ADP.