Time to cut costs and improve productivity? Consider automating your time data collection processes.

Big, small or somewhere in-between, businesses of all sizes are feeling the economic pinch. In the rush to trim budgets, managers are challenged to find ways to reduce costs in every aspect of their businesses. For most companies, collecting time data is a necessary part of the payroll process. But for those who manually collect time and attendance data, the process can result in duplicate effort, delays in processing and even overpayment or underpayment to employees.

"The traditional approach to recording employee work hours -- through punch cards, paper time sheets or Excel spreadsheets -- has many flaws," says Mike Ely, Ceridian Product Manager. Ely estimates that as many as 50 percent of companies still manually collect and process employee time and attendance information.

Potential issues abound
The process of filling out time sheets is ripe with opportunities for employees to "steal" time from their employers. For example, John Jones habitually comes in five minutes late on Mondays, takes an extra five minutes for lunch one day each week and leaves five minutes early on Fridays. If John does not deduct this time from his time sheet, he will be paid for 13 hours that he did not work over the course of a year.

Even honest individuals may find it difficult to recall the exact hours they worked at the end of a one- or two-week pay period. Add to that the fact that supervisors must review and correct each time sheet then forward the information to the payroll department where it is again reviewed, and the issue is compounded. Any questions about time off must be reconciled before check processing begins -- and this reconciliation could be happening weeks after the actual hours were worked.

"With so many steps in the process, and the lapse of time between each step, it is easy to see the potential for human error and the potential costs to an organization," Ely explains. And that does not even take into consideration the time managers and supervisors spend on time-tracking activities that are not their core responsibilities.

It all adds up
While minor discrepancies might not seem like a cause for concern for most companies, the truth is that when added up, they could cost an organization plenty. Consider this scenario: ABC Company has 100 employees. Each employee works an average of 40 hours per week at $25 per hour (fully loaded cost). Suppose the company's manual time tracking system is 99 percent accurate. That one percent error rate will cost the company approximately $52,000 annually.

For many organizations, an automated time and attendance solution can help to rein in the costs associated with time tracking errors, quickly resulting in a favorable return on investment. Going back to our previous example, if ABC Company adopted an automated time and attendance system and achieved 100 percent accuracy in time reporting, they would realize a return on their investment in less than 18 months. In other words, the system could pay for itself in little more than a year.

Other cost-saving benefits
Beyond accuracy and efficiency, automated time and attendance systems offer additional advantages that can result in significant cost and productivity savings for employers:

• Employees and managers can immediately verify the remaining paid time off available to employees, because paid time off is automatically tracked. This eliminates the need for manually tracking time off, reduces the possibility of employees using more or less time off than they have earned, and frees the human resources department from needing to answer requests for paid time off information.
• Managers have immediate, real-time access to information for making staffing decisions. Assume a manager must replace an absent employee. With an automated time system, the manager can quickly identify a replacement employee who will not be eligible for overtime pay for the extra work assignment.
• Managers have access to historical data that can help in identifying and disciplining employees who continually abuse work and attendance policies. Reporting capabilities can allow managers and executives to track overall company trends as well as to identify issues with individual employees.
• Managers can closely monitor hours worked by specific groups of employees, such as truck drivers or employees under 18 years of age. This can significantly reduce the risk of grievances and fines and help an organization remain compliant with collective bargaining agreements and federal and state labor laws.
• Managers can create accurate annual budgets and project estimates. Automated time systems accurately capture when and where labor dollars are spent and can provide detailed labor allocation reports that can be used for a variety of purposes.

Time to outsource?
No matter what size your company, you can cut costs and improve the accuracy and efficiency of payroll by automating your time tracking processes. Estimates show that small businesses spend as much as 40 percent of their administrative time on payroll processes. For larger companies, the percentage might be lower, but the dollar value is undoubtedly higher. Unless payroll processing is a core business function for your organization, outsourcing this function to a third party should be a real consideration.

According to Ely, outsourcing noncore functions such as payroll and time tracking have many advantages for companies of all sizes. "There is no need to install and maintain servers or handle software updates and patches," he says. "If you are a small business, that advantage speaks for itself. If your organization is larger, it means that your IT department can focus their attention on the systems that are relevant to your core business applications."

Ceridian offers fully integrated payroll processing and time and attendance solutions that adapt to your company's ever-changing needs, regardless of its size. To learn more, contact your Ceridian representative.

Sources:
Stop Time Leakage and Save a Fortune, Vincent Lynch, ezinearticles.com, http://ezinearticles.com/?Stop-Time-Leakage-And-Save-A-Fortune&id=1177837
Payroll Outsourcing Costs, Ross Bainbridge, ezinearticles.com, http://ezinearticles.com/?Payroll-Outsourcing-Costs&id=268606
Can Payroll Play a Strategic Role in Corporate Profitability?, Andrew West, American Payroll Association, May 2008, http://legacy.americanpayroll.org/pdfs/pt08e/e1008.PDF