Business How Your Business Can Save $6500/Year...
- Date: 2007-04-03 - Word Count: 793
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If you own or run a small business, you likely have a hidden expense that's eating your time, and your money: tracking employee productivity and time.
When businesses are just starting out, traditional practice is to use a manual time keeping system to track employee time. Employee's fill out a paper time sheet, the payroll administrator confirms the time sheets, cuts the checks, handles the government paperwork and deductions, then deals with overtime, vacation, and requests for time off.
As businesses expand and hire more employees, this manual system becomes extremely cumbersome. The steps to automation start out small - a mechanical punch clock and pre-printed time cards, and perhaps a switch from manual time keeping to using a spreadsheet.
But even this level of automation requires a large amount of manual re-keying of data, and as the number of employees increases, the more demanding and time consuming the needs are for your time and attendance and payroll systems. A lot of businesses become "trapped" with a legacy system, usually composed of several different parts, perhaps even with expensive custom programming in the mix.
Processing payroll is a repetitive and aggravating task which takes up valuable time from administrative personnel who should be serving your business in more revenue generating capacities. Even with the automated steps described above, errors in payroll calculation account for nearly 10 billion dollars in lawsuits and assessed fees annually in just the United States. Some estimates claim that one in four employers make regular payroll errors, mostly commonly with insurance or withholding deductions. Others say this estimate is undercounting the problem, and that it will only get worse as the tax code gets more arcane.
The single most common cause of payroll errors is human error. Especially in systems utilizing paper based punch clocks or manual time cards, human error (as simple as double entering figures or transposing digits) can be extremely costly, and cause the need to do entire correction payroll runs or issue adjustment checks. Most payroll errors are in the range of 1-8%, and even at 1%, when multiplied by the number of employees, can add up to tens of thousands of dollars of lost income.
Error rates get compounded when paper time cards are smudged, morning coffee gets split on them, employee's record their time inaccurately or they just "buddy punch" for each other. Combine this with the time spent verifing results, and the time spent processing payroll (an average of 7 minutes per time card per employee), and you'll see that much of this could be eliminated if you had an automated payroll processing system with integrated time and attendance functionality.
In addition to paying for itself in reduced error rates and saved time, an automated time and attendance and payroll system can provide your management team with laser accurate information about which employees are in on time, and how many man hours (and dollars) are spent on each portion of a project, an important part of project management and cost accounting.
Furthermore, if you ever need to perform a labor audit, an automated system will give you the total hours worked per employee per day on any project, in real time. Fully automated systems also help prevent "buddy punching" and other schemes that employees can use to cover one another's absenteeism or tardiness. Such systems give you the real time data needed to efficiently manage your personnel.
Ultimately, using payroll software with integrated time and attendance functionality gives you a more efficient and streamlined set of business practices, which obviously benefits your bottom line. From a manager's point of view, these software packages allow you to view attendance records by employee, dollars spent on each project, as well as other valuable information about how your company runs, all from the comfort of a simple web browser.
These systems can also be used to let your employees perform "self service" of several routine human resource tasks, such as checking their time sheets, viewing their own pay stubs, even arranging schedule changes or shift swaps, all from their web browser at work or at home.
Given the high cost of payroll errors, most automated payroll and time and attendance solutions will pay for themselves in under a year by reducing payroll errors and saving time for staff. If you assume a company with 20 full time employees that average 10 dollars an hour - say a retail business - a 1% error rate adds up to roughly $6500 dollars a year, which is almost always much more then the software costs itself.
When businesses are just starting out, traditional practice is to use a manual time keeping system to track employee time. Employee's fill out a paper time sheet, the payroll administrator confirms the time sheets, cuts the checks, handles the government paperwork and deductions, then deals with overtime, vacation, and requests for time off.
As businesses expand and hire more employees, this manual system becomes extremely cumbersome. The steps to automation start out small - a mechanical punch clock and pre-printed time cards, and perhaps a switch from manual time keeping to using a spreadsheet.
But even this level of automation requires a large amount of manual re-keying of data, and as the number of employees increases, the more demanding and time consuming the needs are for your time and attendance and payroll systems. A lot of businesses become "trapped" with a legacy system, usually composed of several different parts, perhaps even with expensive custom programming in the mix.
Processing payroll is a repetitive and aggravating task which takes up valuable time from administrative personnel who should be serving your business in more revenue generating capacities. Even with the automated steps described above, errors in payroll calculation account for nearly 10 billion dollars in lawsuits and assessed fees annually in just the United States. Some estimates claim that one in four employers make regular payroll errors, mostly commonly with insurance or withholding deductions. Others say this estimate is undercounting the problem, and that it will only get worse as the tax code gets more arcane.
The single most common cause of payroll errors is human error. Especially in systems utilizing paper based punch clocks or manual time cards, human error (as simple as double entering figures or transposing digits) can be extremely costly, and cause the need to do entire correction payroll runs or issue adjustment checks. Most payroll errors are in the range of 1-8%, and even at 1%, when multiplied by the number of employees, can add up to tens of thousands of dollars of lost income.
Error rates get compounded when paper time cards are smudged, morning coffee gets split on them, employee's record their time inaccurately or they just "buddy punch" for each other. Combine this with the time spent verifing results, and the time spent processing payroll (an average of 7 minutes per time card per employee), and you'll see that much of this could be eliminated if you had an automated payroll processing system with integrated time and attendance functionality.
In addition to paying for itself in reduced error rates and saved time, an automated time and attendance and payroll system can provide your management team with laser accurate information about which employees are in on time, and how many man hours (and dollars) are spent on each portion of a project, an important part of project management and cost accounting.
Furthermore, if you ever need to perform a labor audit, an automated system will give you the total hours worked per employee per day on any project, in real time. Fully automated systems also help prevent "buddy punching" and other schemes that employees can use to cover one another's absenteeism or tardiness. Such systems give you the real time data needed to efficiently manage your personnel.
Ultimately, using payroll software with integrated time and attendance functionality gives you a more efficient and streamlined set of business practices, which obviously benefits your bottom line. From a manager's point of view, these software packages allow you to view attendance records by employee, dollars spent on each project, as well as other valuable information about how your company runs, all from the comfort of a simple web browser.
These systems can also be used to let your employees perform "self service" of several routine human resource tasks, such as checking their time sheets, viewing their own pay stubs, even arranging schedule changes or shift swaps, all from their web browser at work or at home.
Given the high cost of payroll errors, most automated payroll and time and attendance solutions will pay for themselves in under a year by reducing payroll errors and saving time for staff. If you assume a company with 20 full time employees that average 10 dollars an hour - say a retail business - a 1% error rate adds up to roughly $6500 dollars a year, which is almost always much more then the software costs itself.
-------------------------------------------------------- Author: Mike Benoit Website: TimeTrex Time and Attendance - (http://www.timetrex.com)
Note: The author grants permission to you to re-print, publish or broadcast this article so long as it is un-altered or not edited in any way, and that all links remain present and active. --------------------------------------------------------
Related Tags: payroll, employee, time clock, scheduling, time and attendance
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