How To Manage Your Costs through Automated Timekeeping
A recent article in the New York Times noted the rise in workers’ lawsuits against employers for what has been termed as wage theft. These cases stem from underpayment of wages and accrued overtime resulting from improper recording of hours worked. In some of the more egregious cases, workers were asked to sign blank time sheets that were later filled in with inaccurate hours.
Importance of Accurate and Verifiable Time Records
The Internal Revenue Service treats payroll errors, unintentional or not, as serious matters that require investigation. Findings in favor of workers could result in serious penalties for employers, including mandatory back pay with interest and substantial fines.
Legal aspects aside, accurate time records are important inputs in a company’s planning and budgeting strategies. This part of payroll records indicates total man-hours expended to fulfill the company’s core business and the extent of administrative support required to meet corporate goals.
Time records indicate productivity and efficiency, identifying sectors that may need realignment in terms of number of workers, hours worked and incentives provided.
Automated Timekeeping Systems to Enhance Records Management
According to IRS guidelines, time records should be maintained for at least seven years. Given that these are daily records for each employee, it is easy to see that automation can drastically reduce time record-related paperwork. Converting to an electronic punch system eliminates the incidence of lost, misplaced and tampered time cards.
Automating the time record system leads to more efficient records management, making the records more easily accessible for monitoring and controlling work hours and labor costs. Automated time tracking systems that integrate with the company’s payroll processing system enhances back-office efficiency as it reduces the burden and the manpower required to manage payroll.
Cost Management Strategies with Automated Time Records
Labor costs account for a considerable portion of total operating costs in any business. The ability to monitor these costs at any time allows for a quick realignment of resources. Analysis of automated time records can verify the need for working overtime hours and indicate solutions for managing overtime costs.
In fact, with automated time records and automated payroll, decision makers have access to a variety of reports that can track operational efficiencies and inefficiencies. The system can be customized with the right filters so that decision makers can pull up and review relevant details such as who is at work, which departments are understaffed and what work processes appear to need more manpower.
Automated timekeeping systems reduce the likelihood of human error due to faulty data entry and calculations. IRS statistics indicate that 33 percent of employers make mistakes in payroll preparation. These mistakes may lead to hefty fines, costly corrective measures, decline in employee morale and even loss of key employees.
For many businesses, outsourcing regularly recurring functions related to payroll administration results in immediate savings. According to a report by PriceWaterhouse Coopers, companies that opt for in-house management of benefits administration end up spending 18 percent more than companies who outsource these tasks to professional services firms.