What Is Time Tracking?

Time tracking is a term that refers to the process a company office team or a freelancer uses to record their work and ensure that the same employees or freelancers are paid adequately for the hours of work they’ve put in.

The main use cases for time tracking are:

  • Payrollensuring the employees are paid adequately for their work hours.
  • Client invoicingensuring the client is billed appropriately for the work hours that the company or freelancer provided.
  • Team management – ensuring the team leader knows how their employee team spends its time at work and manages that team accordingly.

Time Tracking Breakdown

Time tracking is a very broad term and a key subcategory of time management. Time tracking keeps track of things like:

The time tracking capabilities of a company go a long way to assist managers in tracking how their employees are spending their time at work and how many hours they would need to finish a project. This information will help them enhance the workflow and employee efficiency.

The time tracking process has several important components:

  • Time entries
    Time entries refer to the daily employee clock-ins and clock-outs or the start and end of their workday.
  • Time approvals
    Time approvals are a key component in a modern office as they ensure accuracy and compliance with payroll and timekeeping laws. In most cases, the manager or HR representative will review and approve or reject the employee timesheets, and the software will calculate the hours for payroll, including overtime.
  • Time reporting
    The end result of most time tracking efforts is to generate a time tracking report. The main role of time reporting is to submit and verify work hours for accurate payroll and client billing. Time reports also bring strategic advantages, as they help a company perform budget analysis or identify bottlenecks in the workload, among other things.

Time Tracking in History

Let’s start off with a fun fact. The oldest variant of time tracking can be traced back to several thousand years ago. It was included in an ancient text called the Code of Hammurabi in the part where it mentions the daily activities and wages of the craftsmen.

Up until the turn of the millennium, time tracking functions were managed by using the pen-and-paper model or manual entry. Nowadays, most companies strive to use specially designed time tracking software that automates the time-tracking process.

In-Depth Time Tracking

Time entries are usually a daily occurrence where the employees or freelancers record their working hours by adding:

  • The start of the workday
  • The end of the workday
  • Breaks or other things are usually not included in the employee contract.

The work time recorded by the employees or freelancers is often called a timestamp, and it can be recorded on a physical copy called a timecard or on digital spreadsheets or time-tracking software.

Apart from clocking in and out, employees also track activities when “clocked in”. Regular spreadsheets don’t offer this feature as they only record work hours. 

The My Hours time tracking software, on the other hand, solves this problem by recording segments of the employees’ or freelancers’ time and assigning them to specific projects with detailed descriptions and other details.

Modern Time Tracking Systems

There are different time tracking that we use to track our work hours, including:

  • Swipe cards
    In the past, employees used time cards and punched them into a mechanical clock. Nowadays, however, they look more like credit cards, and employees have to swipe them at a terminal when they start or leave work.
  • Pen-and-paper spreadsheets
    These types of spreadsheets are handwritten and follow the same principle of tracking the daily work hours. They have to be submitted, stamped, and later recorded in a file cabinet.
  • Digital spreadsheets
    Digital spreadsheets are akin to paper timesheets, except they’re digital and can be automatically calculated and stored on a hard drive or USB stick.
  • Time tracking software
    A time tracking software offers a wide variety of features from time tracking, billing, and reporting, all the way to productivity and team management. Most of these features are automated.