The Advantages of a Timesheet Policy
Accurate Wages for Accurate Hours
This is the most basic advantage of using timesheets. In plain terms, employee timesheets are used to calculate the total payroll, i.e. the wages an employee receives as compensation for their work.
A Neat Historical Database
Timesheets put numbers to the tasks at hand, and managers can use these numbers as a reference for future projects.
For example, you notice that most team members needed around 4 days to master the basics of the last couple of projects they’ve worked on in the last two or three months.
Armed with this information, the manager can then use this ace in order to enhance client communication channels and provide an ETA about future projects. This also goes for ETAs regarding time, costs, and resources.
Automated Systems for Increased Efficiency
Timesheets are a great way to uncover activities in the workflow that are less efficient than other activities. This data lets the manager make modifications and alterations to improve the work process.
But, even more importantly, timesheets just make tracking everything easier and more efficient on their own.
In small businesses, the management team can be stretched too thin. Even if the business is medium to large, with an in-house HR team, timesheets can still streamline the huge task of managing payroll, invoices, man-hours, holidays, time off, etc.
In both cases, a timesheet system can:
- Free up managers’ time while still ensuring they stay on top of things.
- Help managers look after employees and nurture crucial company practices more efficiently by automating a large portion of their tasks.
- Help you downsize management or alleviate their workload.
- Help the business or particular team be more profitable in the long run, as these management resources can be allocated elsewhere.
Accurate Invoices and Making Sure Projects Are Profitable
When sending invoices to clients, managers or employers should make sure that these invoices are clean, i.e. accurate in correlation with the hours worked.
The clients that pay for the company’s services should only pay billable hours appropriate to the work that was done by the employees. Timesheets help you with that.
If you are tracking time to bill clients, whether as a company, team, or in the capacity of a freelancer, doing it with timesheets will help you keep it transparent, professional, and accurate, and will make it easier for you to be adequately compensated for your work.
And most important of all, filling out a timesheet or asking team members to log their time will allow you to keep your client projects profitable.
On the other hand, if you’re enlisting somebody else’s services, that is, if you’re the client in the scenario, getting a timesheet along with the invoice will help you gain perspective of the value you’re getting and determine whether your expenses for a particular project are justified.
Track and Adapt Different Roles
Another advantage of using timesheets is that they can help you evaluate the performance of different teams. The data they help you accrue over time can power all sorts of business and management decisions.
For example, you can use them to identify which departments or teams are late with their work and have employees stay longer to get the job done. This can indicate that the department might need a few extra hands on deck, which will be your cue to send them more manpower.
On the other hand, they will also allow you to potentially identify which departments have things a bit too easy - employees may be clocking out early on a regular basis. In this case, you can downsize that team or use its resources on other projects.
Software timesheets, in particular, can be used to track and monitor tasks in a project or separate projects and see whether team members:
- Are efficiently executing their tasks on a project
- Are qualified to be in a certain role within the team.
- Are making a below or above-average effort.
- Are starting to develop a particular area of expertise that can be used to the company’s benefit in the future.
- Have enough time to do their tasks justice.
All of this provides valuable insight into the performance of your teams that can help you decide to give a promotion, distribute the workload differently to increase overall productivity or meet project deadlines, notice and take measures to avoid scope creep and more.
With valuable timesheet data and regular assessment, the possibilities are endless.
The Caveats
Human Error
No matter how advanced your automated timesheet system or online algorithm is, timesheets always require a human interaction factor to be completed. And it’s only human to err.
The inevitable human error factor might be completely accidental, a result of the forgetfulness factor, or, in a worst-case scenario, an instance of an employee manipulating their work hours. This is often called time manipulation or time theft.
To fight human error, regardless of the reason behind it, you should implement some type of timesheet check, especially if the timesheets are used for billing clients or affect payroll or tax.
This means tracking timesheets (on a daily, monthly, or weekly basis, depending on your business dynamic) or adopting the practice of having each timesheet a team member fills out approved by a manager.
Difficulties When Tracking Intangible Tasks
Events of a collective nature such as meetings, brainstorming sessions, and project catch-ups are known to be particularly difficult to track.
For example, you have 4 employees in a meeting with a client for an hour or so. Should you bill your client for a single hour only, and if this is the case, then which employee adds that hour to their timesheet? Or do you charge 4 hours for each employee’s work hour?
To combat this, the best way to go is to make a company decision to make difficult-to-track events such as meetings non-billable events or to charge a fixed rate by the hour. By using timesheets, or the more advanced version - software timesheets, you can send accurate billing reports for each minute an employee has spent working on a particular project. If it took 4 people an hour, it would be logical to bill the client for the four people that worked via legitimate proof.
Extra Staff Work
While an HR team will be delighted by the implementation of a timesheet system, as it’ll make their life easier, other team members might have a different take.
It usually has to do with the fact they now have to designate some extra time to fill them out, an activity not many find particularly enjoyable. While some team members might appreciate the clear processes you’re adopting to nurture transparency, others might not be as thrilled about it.
So, it’s important to have an implementation strategy with the goal of easing everybody into the new process smoothly.
This means:
- Providing training for everybody, and then making sure new team members always receive instructions.
- Showing your team that timesheets are not an inconvenience - they are an asset that helps you distribute the workload and keep everyone accountable.
- Communicating that this policy is something that actually keeps back-and-forth with management to a minimum while still ensuring that things are getting done.
- And, ultimately, showing your team that they’re easy, and take 15 mins per day, tops.
Staff Morale
As the introduction of a timesheet system can affect staff morale in a big way (for the reasons listed above), we’ll share a few more tips that can help you with implementation.
Our biggest tip is that you don’t try to implement this system selectively.
If you or someone from management adopt timesheets only for certain teams and let others off the hook, then the overall staff morale might decrease. Employees who will have to use this system might feel on the spot and wonder why only they have to fill out their timesheets while some of their colleagues don’t.
This even applies to you as a manager or owner. Employees don’t really like to be treated differently than management so it’s important that if employees have to use timesheets, then everyone should use them to calculate their work hours with the same system. This is a great way to create a sense of “we’re all in this together” within your team or company.
How Timesheets Benefit Freelancers
So far, we’ve mostly discussed how timesheets can benefit teams or whole companies. However, if you’re a freelancer, you might find them beneficial too, for the following reasons:
- They help you get paid appropriately. By using a timesheet, you will get paid exactly for how much time you’ve worked. They also make the process of invoicing clients easier and cleaner.
- They can help you keep track of project costs and the hours required to complete them.
- They can help you measure and evaluate your performance on different projects.
- They can give you an insight into your work efficiency for multiple projects.
- They can even help you save money by measuring an estimated budget with your project in progress.
FAQ
How to calculate timesheet hours?
The easiest way to calculate timesheet hours is by subtracting the start time (when employees clock in) from the end time (when employees clock out).
For example:
An employee worked from 9 am to 5 pm. The first step is to change the time format from AM/PM to military time. In this case, 9 a.m. just becomes a 9, while 5 p.m. changes into 17. After that, all you have to do is a simple calculation:
17 - 9 = 8
How to record work hours?
To record work hours, you can use:
- Pen and a paper – track the work hours manually and then write them down on a piece of paper.
- Time clocks – collect employee punch cards and use that data to calculate and record work hours.
- Time-tracking software – the software will automatically record work hours. That data can be used to easily create timesheets.
How do you enter 30 minutes on a timesheet?
When manually filling out timesheets, 1 hour should be always recorded as 1. 30 minutes, or half an hour should be entered as 0.5.
