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Who Else Wants To Take Back Control Of Their Payroll Expense?

payroll expense

For most businesses, payroll is the single largest expense. Did you know that payroll often accounts for between 15 and 30% of gross revenue (or higher) for many businesses? This shouldn’t come as a surprise to anyone who manages a business with employees. But do you really know exactly what you’re getting for that huge investment? In this article we’ll show you how  find out, and how to control the expense.

Hourly and salaried employees get paid differently, but their results are both measured by the time they spend producing value. To know what your payroll investment is getting you, you need to understand where all the time you pay for goes. There are two parts to this equation: time and value.

Value can be a hard idea to nail down because it’s very subjective. In manufacturing, products completed is a good value determinant. If the work is repetitive, one cycle of work is a good option. Value is usually found by looking at what people pay for, or what they think they are paying for, and working backward.

Once you get an idea of what value indicators to use, the next step is getting a good handle on time. Whether your value measures are based on time (selling hours) or based on output (projects completed or products shipped) you need to know exactly how long your workforce spends on each task. The devil is in the details here, so guesses and estimates on time spent aren’t good enough. The American Payroll Association reports that companies lose between 2 and 8% on payroll costs from rounded and estimated timesheets. Considering payroll is such a big expense, that’s way too much waste and lost profits.

To get the data you need, you need to track time. There are many ways to do it, but some are better than others. For decades, the paper timesheet was the most popular way to track work and time. Employees were asked to write down what they did and how it took. Sounds easy enough, but this process is fraught with problems.

People forget to complete timesheets or wait until right before payroll to do it. It’s difficult to remember details days later, so the work information was vague and incomplete and the times were estimated and rounded. A large percent of timesheets were guesses. Paper also has a tendency to get lost. Paper also creates huge administrative effort to track down missing timesheets, collect details to finish incomplete sections and verify times. Ask anyone in charge of payroll for a company that uses paper timesheets. They’ll tell you how hard it is and how long it takes!

Another problem with self-reported time is payroll fraud. Most employees are honest hard working people trying to make a living. But every now and then someone tries to game the system to get paid for more than they worked. This happens more than you might think. The Association of Certified Fraud Examiners (ACFE) reports that payroll fraud affects 30% of all companies, and businesses with fewer than 100 employees experience payroll fraud at twice the rate of larger companies. Surprisingly, the report also states that 87% of employees who commit payroll fraud are first-time offenders with an otherwise clean employment record. These stats are frightening to be sure, but before you consider drastic measures to monitor your workforce more closely, know that there is a better way.

When it comes to time tracking, technology has made life better. Smartphones and the cloud make time tracking more accurate and easier for everyone. Mobile time tracking apps downloaded to an employee’s cell phone allows them to take the time clock with them everywhere they go. This is especially helpful for mobile workforces out in the field. Wherever they need to work, they can track their time. Employee’s clock in and out from their smartphones, so the process still relies on them. This isn’t a bad thing because self-reporting is better than feeling like someone’s watching you all the time waiting for you to screw up. The downside of self-reported time is contained because the employee doesn’t enter their time. Time punches are based on the smartphone’s system time so times cannot be rounded or estimated. You get up to the minute records each time.

Some time tracking apps also require employees to select what they are working on, like a job and a task, when they clock in. Usually, this is done by picking from a list of jobs or tasks so it only takes a few seconds and doesn’t feel like a lot of effort. Time Tracking is done as they work so it becomes a distributed process. It’s easier to take a few seconds here and there than waiting until right before payroll and rushing to get it done by memory. Compared to paper timesheets, mobile time tracking is a dream come true for employees.

It’s also a dream for team managers and business owners. Real-time, accurate-to-the-minute information of every time punch with its associated work detail is everything you need to see exactly where your payroll costs are going. Mobile time tracking also deters payroll fraud. Because times can’t be rounded or faked, the only way to game the system is by clocking in earlier or clocking out later than the actual time worked. Smartphone GPS sensors help alleviate this problem. By collecting the GPS location of every time punch, you can see where employees are when they clock in and out. If someone clocks in early from down the road or clocks out late from home, it’s easy to spot.

There are other benefits to mobile time tracking systems as well. They reduce administrative time devoted to time tracking and save time and effort in payroll processing. Mitigating data entry errors through system integrations and data import/export is also nice. But for determining your overall efficiency and return on investment of payroll costs, mobile time tracking is the gold standard. Accurate, real-time data lets you clearly see what your payroll dollars are doing for you, and where you can improve. Much like life, success and growth in business start with good time management, and the conviction to use it to drive decisions.


This article was written by ClockShark for the MineralTree Blog. ClockShark offers GPS Mobile Time Tracking Apps for companies with a mobile workforce. ClockShark integrates with QuickBooks and offers a 14 free trial, no credit card required, so you can see if Mobile Time Tracking is right for you. Visit for more details.

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