Payroll can quickly become a major expense for businesses with multiple employees. No matter what size company you run, there are benefits to tracking employee costs. That goes beyond simply knowing starting wages. Monitoring the entire payroll process can help you avoid surprises when you are reviewing current budgets and developing future ones. It may also inform hiring and retention strategies. Luckily, there are some simple strategies that you can use to effectively keep track of employee costs.
Use a Time Clock
There are myriad options for keeping track of the time your employees spend working. From clunky punch machines and paper cards to streamlined apps that use geofencing to ensure workers are where they are supposed to be, they have a variety of features and options. It is up to you to decide which ones will help you most effectively and efficiently track employee hours.
If you run a business out of a single location, where everyone physically comes into the facility, then a traditional system might work fine for you. Staff will record when they come in, leave and return from breaks, and when they leave for the day. This might be done at a set station with a traditional punch card. There are also plenty of software options that can be accessed from kiosks or specified computer terminals.
There are plusses and minuses for each option. If you go with a traditional paper version, keep in mind that someone will have to go over each card and input the time. This leaves extra room for human error by adding an additional input stage. It can be cost-effective, however, since you don't have to pay ongoing fees for software. That is perhaps the biggest downfall of using a computer- or app-based system. However, the enhanced reporting and fewer opportunities for mistakes make them very attractive.
For businesses that have employees who work remotely or who spend most of their day in the field, mobile technology has offered some timekeeping solutions. Apps can be used to track employee hours and locations during the workday. The information is then automatically added to the reporting system to generate timesheets for each pay period.
Include All Payroll Costs
The cost you pay your staff goes beyond their starting pay rate. You should have a firm grasp of the total costs associated with keeping each person on staff at your company. Take the time to calculate it by including expenses such as these:
Costs of training and continuing education
Workers' compensation insurance
Health benefits packages
Liability and vehicle insurance
Company-sponsored association fees
Once you have that information handy, an employee cost calculator can help you establish the true costs of your staffing needs.
Review Hours Regularly
Mistakes happen, and many of them can be stopped before they get to your payroll company. Take the time to review hours that been logged onto timesheets. Do they seem correct? Is there anything that looks like it could be an error, whether intentional or accidental?
Encourage employees to fill out manual timesheets regularly. The truth is, most people are not very efficient and accurate when it comes to reporting time spent on a task. Moving to daily time reporting can help minimize mistakes due to forgotten or overlooked work.
Timesheets are vital records in your business. In addition to ensuring that employees get paid for the hours they have worked, timesheets also serve as a way to show compliance with employment laws. This is a huge bonus if you need to report hours to any regulatory or oversight agencies.
Once you have reviewed and approved timesheets, have employees sign off on them. Be sure to note any changes you have made with both you and the employee's initials.
Track and Analyze Reporting Information
There are advantages to reviewing hours beyond catching mistakes. You can compare employee shifts to identify patterns of behavior, such as whether certain employees are consistently clocking in early or late, or if they are skipping or extending breaks. Timesheet review can quickly become an important part of your overall human resource department.
There is a tremendous amount of data involved in payroll processing. Develop a system to track and analyze it to get a better idea of your costs. This will help you identify trends in staffing needs or individual employee behavior. You can also use it to assign staff hours to specific projects or clients. which can make creating invoices and billing much easier.
Understanding the actual cost your business incurs to maintain employees is key to developing and adhering to a viable budget. Be sure to include the cost of all benefits, taxes, and association dies that are part of any compensation packages. For hourly employees, develop a system to record, track and report time worked on each project. Careful review and certification of timesheets can help you meet regulatory requirements and should inform future staffing decisions.