It’s 8:05 a.m. on a Monday morning. Your employees have just settled into their desks to begin their day. Thursday evening rolls around and those same employees write “8:00 a.m.-5:00 p.m.” on their time cards and hand it in for approval.

This poses the question, how much time and money is actually lost by employers by using a manual time system?

You might figure that since you have employees who fill out time sheets, that the only real cost involved is maybe the cost of the paper. But there are also hidden costs that I’ll explain to you.

Time theft

This is a common issue experienced in many industries that employ hourly workers. Whether it’s intentional or unintentional, it can cost your business big, unnecessary bucks.

What happens with time theft is that when an employee is filling out their time sheet for a bi-weekly payroll on the 15th day after the pay period started, it’s tough for them to remember what they had for lunch yesterday, let alone what time they got to work two Mondays ago.

It’s just human nature and again, not intentional. “I don’t really remember what time I came to work so why would I intentionally put myself down as being late?”

That being said, there are circumstances where a little fudging takes place when filling out a time sheet. If an employee is working out in the field, had to leave early to catch a baseball game, but the time that gets written down is exactly 5 p.m.

The takeaway for employers: these missteps add up tremendously.

Human error

Somebody, somewhere has to add up those time sheets. It could be the employee adding up their own hours or the human resources department. It’s easy to make mistakes, even with a calculator (hey, I do it too).

The American Payroll Association estimates that those errors are between 1-8%. Let me explain. There is an error factor on the total payroll for an employee between 1-8% based on the fact that someone added up the time card wrong.

The takeaway for employers: human error can add up tremendously.

Paying an employee

Another cost factor associated with a manual time card system, is the actual time it takes to collect all of the time cards, add them up, and collect any missing information. Once the information is collected it needs to be manually entered into payroll. Someone has to be compensated for that time, time they could spend being productive in other areas.

Real math

Let’s break this down for you by the numbers (provided by one of our vendors SwipeClock). Using a 50 employee company pays its employees $12/hour, bi-weekly as an example. Say their employees waste 5 minutes a day. The costs for the wasted minutes alone for all 50 employees is 250 min/day. At $12/hour that’s $13,000 wasted just by employees fudging 5 minutes.

Now remember that there’s an error factor of 1-8%. For this example, we’ll assume there’s a 2% error rate in the payroll.

$12/hour x 2080 hours/year (full-time employee hours) x 50 employees = $1.25 million in payroll
$1.25 million x 2% (error rate) = $24,960

$24,960+$13,000=$37,960.

That’s $37,960 LOST due to wasted hours and the error rate.

Mobile workforce

What can employers do to combat this wasted time by employees?

One of the hottest products on the market today is a mobile application. Because of the mobile workforce that we have today, people are everywhere. It’s a great resource to have employees clock in and out.

To resolve the issue of employees clocking out at 5 p.m. when they’ve really been at Starbucks since 3 p.m. is adding GPS to the picture, which many of the most up-to-date automated time and attendance systems have.

For business owners, this should bring peace of mind knowing that an employee was actually on-site when they clocked in; they’re actually paying people for the job they’re supposed to be doing.

It’s almost less expensive to provide a smartphone to the employee rather than allow them to turn in handwritten timesheets: that’s how much money the employer can save.

How can PrimePay help?

We’re so glad you asked.

Does it make sense to have an automated time and attendance system? If you have one employee, it makes sense. If you have 50 employees, it really makes “dollars and cents”. (And anywhere in between). You’re going to see similar types of savings coming back to you where the automated time and attendance system doesn’t cost, it pays.

You’re also putting money back in your business instead of paying for things you shouldn’t.

Contact your local PrimePay rep today to figure out how you can start saving. 

Did you know? Larry Dickinson is an industry expert who was recently featured in this article from Fit Small Business - "Employee Schedule Template & Instructions". Read what he has to say about when to consider employee scheduling software and how to use it here.