It’s important to keep track of where your employees are spending their time, particularly if you work with clients and provide services that are charged at an hourly rate. Time tracking is needed not only to bill clients accurately but also to be more aware of how much time is being spent on administration and other non-billable activities, as well as time spent working directly for a client.

If you’re a small business with just a few employees, your time tracking system is probably fairly basic, using paper timesheets or simple spreadsheets. This may be sufficient at first; but as your business grows and becomes more complex, you’ll soon find that you need a more efficient and accurate way to keep track of your employees’ time.

To avoid ending up in a situation where your time tracking system completely collapses, you should look out for some of the warning signs that indicate your current system is no longer working.

1. It Takes Too Long to Get Timesheets Turned In

Systems used for entering time are often difficult to use or require a lot of manual entry, which takes time away from other work, and is highly distracting. If employees don’t fill out timesheets very regularly, they’re likely to be inaccurate, as it’s difficult to remember the exact time spent on different tasks.

Another issue is that timesheets may need to be entered for more than one system (one for payroll, one for projects, and so on) which makes this task even more time-consuming and inconvenient.

2. It Takes Too Long to Process Timesheets

Once timesheets have been submitted, they need to be processed, usually by manually entering the time into the various different systems for accounting, payroll, billing, etc. This is another time-consuming task that can become quite overwhelming for more than a handful of employees – and can result in inaccuracies, delayed payroll and invoicing, and even lost revenue.

It’s also necessary to keep track of leave time for vacation, sickness, and other reasons, and this must also be entered into different systems for processing. It’s also possible that the accounting or ERP system you’re using lacks functionality…

3. Your Current System Lacks Certain Necessary Functionality, Such as:

All of the above are important features to save time and ensure easy processing of time tracking for various departments such as payroll, accounting, human resources, etc. If your current system is missing out on some of these features, your business could surely benefit by upgrading to a more modern and feature-rich system.

4. You’ve Outgrown Your Current System of Tracking Time

Paper timesheets and Excel spreadsheets may work fine for a small office with a few employees, but they can’t scale up as you grow, and soon become cumbersome to manage.

Even if you have a more automated system for time tracking that was built in-house, this could prove to be difficult to keep up to date, particularly if only a single employee is familiar with using it. Consider the “bus scenario” – if that employee was hit by a bus, do you have everything you need to administer your time tracking system?

5. Your Projects Are Going Over Time and Over Budget

Both of these issues are symptoms of inaccurate time tracking, which is usually caused by a system that is difficult to use or manage.

In order to deliver projects on time and within budget, it’s vital to track employees’ activities accurately. This allows comparison of the actual time spent against estimated milestones, and allows you to foresee slippage more quickly so it can be dealt with accordingly.

6. You Don’t Have Enough Information on where Time is Being Spent to Make Informed Business Decisions

Accurate time tracking and classification of tasks is also important to ensure clients are billed correctly, and tasks such as communication by phone or email are included in the bill and not lost. The average professional service provider loses $50,000 a year due to not including time spent communicating with clients via email in their timesheets.

It’s also important to be aware of too much time spent on low-value tasks, like email. When you can see exactly how working hours are being spent, you can compile more accurate and detailed operational reports, and work to optimize how time is spent to increase productivity overall.

Invest in Your Time Tracking System

Time tracking is a necessary activity for most service-based businesses and, without the right tools, it can be costly, time-consuming, and difficult. A good time tracking system should eliminate these issues and ultimately help your business to be more profitable and productive.

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