Why Is Time Tracking Important? 8 Benefits You Need to Know
Published on October 26, 2023
5 min read
Why Is Time Tracking Important? 8 Benefits You Need to Know
Did you know that companies lose at least $50,000 per employee every year on untracked time?
According to a study by Mckinsey, employees spend 42% of their time reading and answering emails, collaborating, and communicating internally. The hours spent on these tasks are often unmonitored and therefore, unbilled. As a result, businesses shoulder the costs of these non-recorded hours.
This is why tracking time is important across all teams, departments, and organizations.
In this article, we’ll discuss the benefits of time tracking for every company, regardless of scale and industry. We’ll dive into how to use online time tracking software to achieve your business goals.
What is time tracking?
Time tracking is the process of recording the working hours of employees against each task and activity assigned to them. The purpose of time tracking can vary for different businesses. In all industries, these are the common uses of tracking time:
- Determine how much time employees spend on each project
- Ensure that each person is compensated fairly and accurately
- Develop an efficient billing and invoicing system for clients and contractors
- Have an instant overview of account receivables and payables
Traditionally, time tracking is executed on paper or through manually plugging in data on spreadsheets. However, this method is prone to errors and miscalculations. It also takes a chunk of time from your admin teams who could be doing more impactful work. In fact, research shows 80% of companies that still use paper systems need to redo or amend 80% of the time records sent by employees.
This is why modern solutions such as online time tracking apps have become the norm among thriving businesses, agencies, and firms.
Who uses time tracking software?
Time tracking software is mostly beneficial for all types of businesses that:
- Provide client services such as agencies and firms
- Offer flexible work hours
- Adapt a remote or hybrid work set-up
- Invoice clients per hour
This may include small to medium businesses, and large enterprises. Industry-specific agencies in marketing, security, manufacturing, engineering, construction, law firms, and architectural firms, will also find it beneficial.
Essentially, any business can implement time tracking software and utilize this simple tool to achieve their company’s goals.
So, how exactly can a time tracking app improve the way you do business? Let’s take a look at the top benefits of employee time tracking.
Time Tracking Benefits Every Business Should Know
Visualize your team’s capacity
Establishing business operations in itself is a challenging feat. Adding people-management and team monitoring into the mix makes it even more demanding of your time and attention. As a business owner, agency founder, appointed supervisor, or entrusted HR partner, the brunt of project and team management falls on you. This includes monitoring the team’s ongoing tasks, managing their workload, and determining what’s on their plate.
To accomplish all of these without micromanaging, you will need broad visibility on their activities for each project or client. Through time tracking software, you and your team will be able to:
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- Access a single dashboard that generates data on how much time they spend on each task
- Identify areas in which they may need guidance
- Develop actionable steps to be implemented moving forward
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Using these insights, you will be able to help your team avoid burnout, provide the right assistance to accomplish tasks more efficiently, and verify that everyone is producing relevant output.
Accelerate productivity and improve scheduling
By having shared visibility into their capacity, you can collaborate in coming up with strategies towards improving their efficiency. With better scheduling, organization, prioritization, and task distribution comes higher productivity. These factors highly contribute to how your team will approach work.
Time tracking gives employees a sense of responsibility over how they manage their hours, meet deadlines, and accomplish their work. By seeing actual data on how much time they take on specific tasks and identifying patterns across different projects, they will have a concrete basis on how they will approach work to hit their KPIs.
It encourages employees to focus on the tasks at hand, plan ahead for the next batch of projects, and ensure that every minute at work counts. Overall, as teams become more adept at managing their hours and activities, their productivity increases.
Accurate invoicing and payments
It’s easy to estimate how long it takes to accomplish tasks, but it’s not synonymous with accurate data. For agencies and firms, this is a major consideration because clients are billed for the time spent working on their project.
For example, every task an employee completes takes 30 minutes more than your estimate. Let’s say that they complete an average of 10 tasks a week. That’s approximately 260 unbilled hours per year for that employee alone. Just multiply this by the number of people you have in your team.
With the right time tracking software, you will be able to generate accurate data for cost projections. Likewise, it allows you to invoice clients automatically and monitor the receivables per project. In result, your team earns what you deserve based on the actual amount of time spent working on the tasks.
Track “hidden” tasks
Along the lines of unbilled, underestimated time are the “hidden” tasks that take a considerable amount of hours left untracked. These are small, general activities that still need to be done in order to accomplish the bigger tasks at hand. However minor they seem, when summed up, those minutes turn into hours that consume a significant part of your week.
Among these hidden tasks are:
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- Recurring administrative and documentation tasks including printing, sending out documents, coordinating logistics, filing necessary office paperwork, manual time recording, and more
- Time spent communicating with clients via instant messaging, email, and phone calls
- Internal team discussions and coordination on multiple messaging platforms and calls
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67% of employees say that majority of time spent in meetings and calls distract them from focusing on value-adding work. 34% said that they spend roughly 2-5 hours on calls and meetings that do not serve relevant purposes.
A time tracking app will allow you to take these hidden tasks into account, calibrate your project timelines, and adjust cost estimates more accurately.
Smarter work for Admin
Every HR professional knows how dreadful payroll periods can be, especially for companies that do not have automated time tracking software. Manually encoding employee time records poses a high risk of human error and slows down processes while affecting the productivity of HR teams. A study by Deloitte states that 50% of employees who don’t have automated time tracking tools believe manual data input consumes most of their time.
Even worse, miscalculations and delays compounded over time could lead to employee complaints and demotivation. In fact, a survey showed that 49% of employees will resign after experiencing a couple of issues with their paychecks.
This is why you need a platform capable of automated time tracking, invoicing, and payroll processing. As you avoid the risk of recurring errors, you will also be able to count on your HR teams to focus on more meaningful, value-adding tasks that will benefit the entire organization.
Bolster profitability and reduce unnecessary costs
With heightened productivity and smarter work processes implemented across the organization, you can almost guarantee an increase in revenues and reduction in expenses. According to a study by McKinsey, companies can boost their productivity by 30% through the use of “smart meters and grids, digital productivity tools for employees, and automation of back-office”. This includes integrated and comprehensive time tracking software.
With a well-monitored dashboard that reflects budgets and billable hours, you can easily project expenses against receivables, and track revenues to ensure that your company is paid for the work you put in.
Overall, companies that use integrated time tracking and payroll tools are able to surpass their revenue targets by 7%, making this type of productivity app a must-have tool for growing organizations.
Make strategic, data-driven decisions
Data generated from time tracking can help you make more informed decisions on different areas of the business.
For example, if you’re noticing a low profit margin on specific types of projects or tasks, a new strategy or reassignment of the job solves the core issue. Delegate tasks to new employees so that senior team members can focus on strategic involvement. Doing so will ultimately ensure that your business aligns with your clients’ goals. The result will be a pivot from repeating unsuccessful, miniscule practices, to focusing on greater, high-impact projects.
Having accurate information at your fingertips can help you move forward with a data-driven strategy and smarter decision-making– the basic foundation of thriving businesses.
Transparency and building trust
As a service provider, one of the most crucial aspects of winning and retaining clients is gaining their trust. While technical and communication skills are essential, showing them that you can get the job done at the agreed upon timeline and budget will create a huge impact on how they see you as a company.
In some industries, a record of hours worked is required for invoicing, especially if your company is considered a contractor. This can be a heavy task every month-end as compiling and double-checking timesheets of various team members could take days. It may also pose errors particularly if you do not practice daily or weekly time records. If these miscalculations are discovered by your clients, it may lead to bigger issues on trust and transparency.
Time tracking is one of the best ways to address this before it even happens. Your project managers, supervisors, and clients will have a sense of transparency into the work being done as your team logs hours spent on tasks. It gives both sides the confidence that assignments are accomplished and invoiced appropriately, which in the long run, will create more opportunities for your business.
It’s time to get Productive.
Productively is a time tracker app that lets you elevate work efficiency with advanced time tracking, real-time reports, and powerful analytics. We believe that if you can manage your hours, you can handle all tasks, overcome challenges, and achieve your business goals.
With a streamlined dashboard that lets you visualize time tracked by days, weeks, months, or even by client and project, you will be able to make more informed decisions based on accurate data. Its seamless invoicing feature allows you to automatically generate account statements for a more organized billing and receivables system. Altogether, it provides a comprehensive view of your teams’ efficiency, hours worked, billables, and profit.
Bolster productivity, reduce unnecessary costs, and improve the way you do business with the app that will empower you to visualize your capacity and opportunities.
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