Payroll Processes to Improve Employee Timekeeping
What is employee timekeeping?
Employee timekeeping refers to the process of tracking and recording the hours an employee works. This includes monitoring when they start and end their shifts, any breaks taken and any approved time off, such as holidays or sick leave. Accurate timekeeping is crucial for various reasons, including:
- Calculating payroll accurately
- Complying with labour laws
- Producing accurate forecasts and reports
- Promoting transparency and trust between employees and employers
Common timekeeping errors in businesses
Several common errors can occur in businesses regarding employee timekeeping, leading to inefficiencies and potential legal issues.
Manual timesheets are the most common source of inaccuracies. Human error is inevitable and can happen when employees are recording their time or when the payroll team are calculating the data. This can lead to inaccurate payments for employees, inefficient spending for businesses and client billing errors. Manual timesheets are also time-consuming to manage and susceptible to tampering in the form of buddy punching (when one employee clocks in or out for another).
Unclear policies are another silent enemy for payroll teams when it comes to timekeeping. Lack of clear communication about expectations and procedures can cause misunderstandings and unintentional misuse of the system. Clocking in and out during breaks or overtime are two areas that can be prone to errors, along with the policy for reporting missed punches or booking time off.
Ignoring time theft or simply not noticing it is very common in businesses with outdated timekeeping processes. While occasional tardiness might be excusable, constantly overlooking it can create a culture of laxity and discourage punctuality. Buddy punching or extending breaks without permission are the most common things to look for when it comes to time theft.
Failing to review timesheets regularly can often lead to errors or misuse going unnoticed. In busy periods it’s easy to let the laborious task of reviewing timekeeping data fall by the wayside, but doing so can lead to increased costs for the business or underpaying employees, causing frustration for them and more admin for your payroll team.
What is best practice for employee timekeeping?
To mitigate these errors and improve payroll accuracy, businesses should adopt best practices for employee timekeeping:
- Invest in a reliable timekeeping system: Choose a system that suits your company size and needs, such as biometric time clocks, online timesheets or mobile apps. They are convenient for employees and produce much more accurate data than manual timesheets.
- Automate payroll processes: If you use modern payroll software, you can set up an automated feed from your timekeeping system to your payroll. This saves time, reduces errors and improves your spending efficiency.
- Regular Audits: Conducting regular audits of timekeeping records helps identify discrepancies and ensures accuracy. Some timekeeping software will automatically detect errors and discrepancies, which you can review before importing the data into your payroll system.
- Clear Policies and Training: Establishing clear guidelines on timekeeping procedures and providing training to employees on how to use your preferred timekeeping system ensures compliance and reduces misunderstandings.
The benefits of efficient timekeeping for businesses
Efficient timekeeping not only streamlines payroll processes but also offers several benefits for businesses:
- Cost Savings: By accurately tracking employee hours and eliminating errors, businesses can reduce unnecessary labour costs and potential compliance penalties.
- Increased Productivity: Clear timekeeping policies and accurate tracking encourage employees to adhere to schedules, leading to improved productivity and workflow efficiency.
- Legal Compliance: Accurate timekeeping ensures compliance with labour laws and regulations, reducing the risk of legal disputes or fines.
- Better Resource Allocation: Insights gained from timekeeping data allow businesses to make data-driven decisions. This helps them to allocate resources more effectively to optimise staffing levels and schedules.
Need help with timesheet processing?
At Finesse Resources, our payroll solutions encompass every aspect of the payroll process. Whether you’re looking to outsource your payroll completely or just need help with data entry and timesheet processing, we will provide a service tailored to your needs. View our services or speak to one our CIPP-accredited professionals today.