Introduction Timesheet Software Guide

White-collar workers are generally more likely to track project hours, compared to their blue-collar counterparts who mostly track hours for time and attendance. For example, lawyers may need to log billable hours at a certain billing rate in order to correctly invoice a client. But fast food employees may use a swipe card to log the exact time they entered and left their physical job site. Both methods capture hours worked and are processed by back end operations such as legal, HR, payroll, etc.

Why Organizations Use Timesheets, Part 1: Timesheets For White-Collar Workers

Teams that use timesheets tend to understand in greater depth which projects and tasks are using the most resources. This knowledge is particularly helpful in white-collar industries who often need to understand the true cost of projects to determine their profitability. The following are eight common reasons why white-collar businesses find timesheets advantageous:

1. For Project Costing

During project execution, it’s imperative to track actual costs against forecasted costs and flag any variances. These variances may present as either overages or underages, but both are problematic. Any overages can quickly blow a budget. And while being under budget may initially sound positive, it can also indicate that the project isn’t progressing or hasn’t been properly scoped.

2. For Project Forecasting

By using timesheets, project managers can refer back to historical project data so they can create better timelines and budget estimates. Professional Services firms can also use this past data to help forecast potential profitability when considering new initiatives.

3. For Utilization Tracking

Timesheet data also provides knowledge around utilization rates which determine how much an employee’s time is billable. Knowing how many billable hours each employee is typically producing is an important consideration when it comes to forecasting revenue.

4. For Tracking Non-Billable Hours

Non-billable hours are also important to track on timesheets. Doing so shows which projects are being bogged down versus which ones that are running smoothly. Most employees will log non-billable hours at some point whether they are in training sessions, pitching a bid, or doing research. But when managers can identify outliers in specific projects by way of an increase in non-billable hours, it can serve as a red flag to check in with their team.

5. For Accurate Client Billing

When firms invoice clients they notify them of what work was completed, the financial value of that work, and the expected compensation. It’s critical that this is done accurately. Any incorrect billing may sever client trust. But by using timesheets, white-collar workers can log billable time down to the very minute. This level of precision results in much more accurate client billing and provides complete transparency into how much billable time was charged to a project.

6. For Uncovering Process Bottlenecks

Timesheets also serve as a highly effective way for white-collar workers to understand where process bottlenecks are occurring. By breaking down projects into specific activities, patterns and process gaps become evident. The data is often a clear indication as to where exactly in the workflow problems are arising.

7. For Profitability Analysis

Profitability analysis is the process by which businesses decide whether a project is worth the time, effort, and resources that will be allocated towards it. It’s also why businesses prioritize one project over another when there are multiple initiatives vying for resources. Timesheet data provides business leaders with a top-down view of all the resources and hours spent. This helps leaders take a long lens approach to assessing project profitability.

8. For Grant Compliance

All U.S. businesses that receive grant money, whether they are non-profit or otherwise, are required to keep meticulous records and provide strong internal controls. This is especially important for non-profit organizations who are often tracking grant spend down to the penny. These organizations often use timesheets to record how many hours their employees spend on each program. By doing so, they can allocate employee compensation across the grants they're servicing. These records are often used in grant financial audits.

Why Organizations Use Timesheets, Part 2: Timesheets and Software For Blue-Collar Workers

Blue-collar workers tend to use timesheets mainly for time and attendance tracking. Location monitoring is a valid concern for this group of workers because they typically need to be physically present on job sites before they can start logging hours. To facilitate blue-collar work, timesheets are often used to help with the following:

1. For Accurate Payroll

Blue-collar businesses primarily rely on timesheets so workers get paid correctly. In addition, when businesses integrate timesheets with their payroll systems it helps to streamline accounting workflows. Doing so can add an extra layer of protection to ensure that payroll is executed accurately, quickly, and legally. Moreover, using timesheet software creates a digital audit log that can be pulled should any controversy arise. These logs provide clear evidence as to when timesheets were submitted, approved, and edited, which could prove crucial should an audit or employee dispute occur.

2. For Location Tracking

Businesses such as transportation companies need to know where their fleets are at every moment and whether deliveries are tracking on time. Therefore, geolocation and GPS tracking tools are now built-in to mobile time tracking apps. In addition, truckers use expense tracking, transportation estimates, and billing features which may all be included in timesheet software platforms.

3. For Employee Scheduling

A construction foreman who oversees large projects and multiple job sites needs to ensure crews are correctly scheduled. Foremen can use timesheet software to create employee schedules and even provide directions to job sites. Rescheduling or pausing work, due to inclement weather or otherwise, is also facilitated by having a central communication tool designed for this level of day-to-day agility.

4. For Capacity Planning

A landscaping company may need to scale workforces depending on seasonal demand. Employing a flexible workforce ensures that businesses have the right number of workers employed at peak times to support their project load. Timesheet software can make this process easier by offering capacity planning tools which help determine the roles, people, and skills needed for each job.

Why Organizations Use Timesheets, Part 3: For Both Blue-Collar and White-Collar Businesses

While the job requirements differ greatly between these two types of work, there are some areas of overlap as to why both businesses use timesheets. Below are three use cases that apply to both groups:

1. For Overtime Costs

When overtime costs are left unchecked, expenses tend to get out of control fast. Timesheets help give clarity to complex overtime calculations which may vary by state, country, or currency. Knowing this information early in a project’s life cycle can give managers the information needed to take corrective action.

2. For Regulatory Compliance

All U.S. businesses are required to track time for all non-exempt employees and maintain those records for two years. Doing so not only keeps companies FLSA compliant, but also helps them avoid potential lawsuits. The FLSA states that employers may use any timekeeping method they choose, as long as the resulting records are complete and accurate.

3. For Time Off Tracking

Both blue-collar and white-collar workers are entitled to days off for various reasons. Timesheets can help managers distinguish why their employees are not at work whether it is for vacation, holiday, sickness, family leave, disability, etc. Employees can also be assigned customized leave types depending on their terms of employment.

1. Planning and Budgeting

Planning and budgeting tools gives businesses a leg up when it comes to sticking to forecasts. Managers can use these tools to track project spend in real time, allowing for any necessary course corrections. The best software solutions also show past project performances that are similar in scope. Leaders can then use that information to inform current projects.

2. Profitability Analysis

Timesheet software facilitates profitability analysis by helping managers understand how to optimize profit margins. Leaders can manage billing rates during a project's lifetime to reflect changes to salaries, roles, or scope creep which all affect financials in long-term projects.For example, for businesses that provide a service, tracking employee billing rates allows them to see what servicing a client truly costs. Once they can attest to a project’s true cost, they’re then able to determine which projects will yield the highest profit.

3. Capacity Planning

The best timesheet software solutions also offer capacity planning tools. These tools make it easy for managers to see the total amount of projects teams can take on in relation to the number of workers they employ. By using software capacity tools, leaders can create accurate, real-time resource plans.

4. Project Performance Management

Easy-to-use project dashboards enable managers to monitor client and project performance directly from one screen. These list views are often filterable and can provide spend rate data in real time. This way, leaders aren’t waiting until the end of a pay period to catch project overages/scope creep.

5. Streamlined Back End Processes

Timesheet software solutions also help streamline processes across business departments. When integrated with payroll, managers can quickly send hours worked by employees eliminating the need for duplicate data entry. Invoicing can also be facilitated by separately tracking billable hours.

6. Centralize Project Costs

Centralizing data has an important impact on project costs. Bill and cost rates may vary by employee, client, project, task, role, or more. By using timesheet data, project billings and cost data become easily accessible. Timesheet software will recognize any overruns and programmatically alert stakeholders.

7. Automatic Cost Rate Calculation

Automatically calculating the cost of every hour salaried employees work enables leaders to understand the price of each employee’s time. Timesheet software can then allocate those costs across the projects they work on so managers can understand their true project spend.

8. Increased Timesheet Accuracy

A time tracking platform often has automated tools and reminders to alert employees it’s time to complete their timesheets. When time entry data is entered into the systems as it is completed, it greatly increases the likelihood of that data being accurate.

9. Expense Tracking

Some timesheet software allows employees to track expenses for purchases or costs incurred against a project by creating expense sheets that are then submitted for reimbursement. Once expenses are approved, costs can immediately be available for project cost reporting, analysis, and billing.