How To Buy Employee Time Clocks for Small Business: The All-Encompassing Guide

Congratulations! You found the most comprehensive guide to time clocks for small business on the web.

If you have a small business and need a small business time and attendance system, you’ve come to the right place. Operating a small business requires brains, brawn and good work tech. When it comes to tech, an employee time clock should be your first purchase.

1. What is a Small Business Time and Attendance System?
2. Critical Reasons Why Small Businesses Need a Time Clock System
3. Types of Time Clocks for Small Business
4. Talk to an Expert at WorkforceHub

What is a Small Business Time and Attendance System?

A small business time and attendance system uses integrated hardware (including time clocks) and software tools to track employee work hours for payroll. These types of systems eliminate the need to manually fill out paper timesheets. When an employee clocks in with a physical or web-based time clock, the system captures the punch in/out to track work hours. Time and attendance systems are more efficient and accurate than paper-based tracking.

Before cloud computing, this type of software was custom-built and stored on company servers. Today, most small business systems are cloud-based. Small businesses typically pay a software vendor a monthly fee to use them.

Critical Reasons Why Small Businesses Need a Time Clock System

Stay Compliant With Workplace Laws

Consider Fair Labor Standards Act (FLSA), Affordable Care Act (ACA) and Family Medical Leave Act (FMLA) laws. They apply equally to all workers, regardless of the way they are paid. Automated timekeeping creates a foundation for compliance.

It not only ensures accurate payroll, it automatically stores essential records. Small employers must retain work schedules, PTO, overtime, and employee classification records.

Haven’t upgraded to a time clock system? Consider these questions:

• Is your current system accurate, or do you sometimes overpay/underpay employees?
• If you were audited, could you produce timesheets for the past three years?
• How long does it take you to process payroll?
• Do you pay one of your employees to prepare timecards?
• Is unplanned overtime inflating your labor costs or impacting cash flow?
• Do you calculate Paid Time Off (PTO) with spreadsheets?
• Do you want 24/7 mobile access to timecard data?

Here are 7 critical reasons why you need online timesheets, even if you are a small business.

Reduce Payroll Errors

A small business time and attendance system makes payroll more accurate in several ways. First off, employees punch in and out on a device integrated with software. This significantly reduces human error in entering and adding hours. Secondly, employees track hours as they work, not after the fact. This prevents errors due to faulty memory. Thirdly, an automated system reduces intentional employee time theft – especially if you use a biometric time clock. (More on biometrics ahead.) Lastly, an automated solution syncs FLMA leave, PTO, and overtime which reduces the risk of an error due to hours classification under these categories.

Maximize Labor Resources

Time clock systems track KPIs that owners can use to optimize their human capital. KPIs include hours worked per team, location or project, overtime per team, location or shift, and project hours. Having time and labor analytics at your fingertips can help you strategically manage your workforce.

Protect Yourself Against Employee Time Theft and Wage Theft Claims

If your employees report hours on an ‘honor system’ you are at risk for time theft. You might trust your team. Hopefully they are worthy of your trust. But employers who are too trusting can be cheated. Successful businesses ensure employee accountability in all aspects of their jobs. Why even open yourself up to time theft?

Wage theft can feel even more insidious. If you ask employees to record their time manually, they are bound to make errors. You don’t know whether those mistakes are in your favor or theirs. Neither do they. This can lead to concerns about fairness and erode teamwork. You might worry that you are not paying your employees for all the time they work. They might worry about that too…and take you to court with a wage theft claim.

Paper timesheets are simply too vulnerable to hours padding and buddy punching. They are also at risk of time shaving and forgetfulness. Many employers who switch to turnkey online timesheets are surprised by the drop in hours. It’s interesting how automated time tracking puts an end to early clock ins and other sources of time creep.

5 Key Findings About Employee Time Tracking for Small Business

1. $7.4 billion is lost per day to unrecorded work activities. (Source)
2. Time theft can take as much as 7% from your gross annual payroll. (Source)
3. Automated time tracking can reduce the time it takes to calculate timecards from 7 minutes/card/pay period to 1 minute/card/pay period. (Source)
4. Daily timesheet updates improve timekeeping accuracy. Employees who log their time at least once a day are 66 percent accurate, whereas people who log their time weekly are only 47 percent accurate, and people who complete their timesheet less than once a week are only 35 percent accurate. (Source)
5. The average cost of labor every time an employee fills out a timecard is $9.37. For a company with 100 employees, that’s $937 in employee time every pay period. (Source)

Minimize Overtime

If you have hourly employees, overtime can be an issue. Manual systems don’t have built-in alerts to notify you when someone is approaching overtime. The larger your company, the more unplanned overtime costs you. The smaller the company, the bigger the impact of unplanned overtime can feel. Reducing overtime hours is one of the easiest ways to shrink your labor costs. Automation makes it easy.

Improve Employee Oversight

A cloud-based system allows managers, owners, shift leads and rank and file employee to access time and labor data anytime, anywhere. Mobile time systems with geofencing can even track location on punch in and out for mobile or remote employees. Improved oversight is a key advantage.

Features to Look For When Buying Time Clocks for Small Business

Since you can’t run your business without paying your employees, time and labor is mission-critical. Therefore, when looking at tracking software, focus on payroll accuracy, efficiency and convenience.

1. Online timesheets
2. Payroll integration
3. Advanced reporting
4. Accruals management
5. Employee self-service
6. Mobile app
7. Finger or facial scanning clock integration

Let’s discuss each feature.

1. Online Timesheets

Paper timesheets could be called wasted time sheets. After all, employees have to take time out of work to add shift start and end times. Managers have to remind employees to fill them out and then collect them every pay period.

Not to mention, they are prone to errors. For example, employees estimate punch times after the fact. Some even pad their hours to bump up their paycheck a bit. Furthermore, when a manager finds a missed punch, they have to spend time investigating. Clearly, there is no reason to use paper or spreadsheets when a low-cost tool can automate the process.

A time tracking system tallies the hours for each shift and pay period as well as overtime and PTO accruals. The software doesn’t make arithmetic mistakes, managers don’t need to double check. Furthermore, supervisors don’t need to decipher sloppy writing or investigate missed punches.

2. Payroll Integration

Whether you use QuickBooks Online, Gusto or some other platform, you should be able to import employee hours data directly. Otherwise, you are not getting all the benefits of automation. If your payroll manager is currently manually entering data from timesheets into a spreadsheet for export, here’s your chance to make their job a whole lot easier.

3. Advanced Reporting

Even small businesses can use big data like larger orgs. Time and labor insights from your tracking software helps you make better decisions. Consequently, the best software for tracking time should generate reports with a couple clicks.

4. Accruals Management

At many orgs, PTO lives in HR, outside of time and attendance. But this makes no sense–because vacation and sick leave are integral to payroll, scheduling and compliance. The answer is to sync PTO to timekeeping.

Good PTO management is essential for employee retention and a positive corporate culture. To keep employees happy, you need to manage PTO so they can take time off without impacting business operations. With the best time tracking software, employees request time off in the system and managers can see all requests in a centralized location. Importantly, they can see PTO when building schedules. This ensures shift coverage when employees are on leave. Simplified approvals is a compelling reason to use a timekeeping solution.

5. Employee Self-Service

When you track time with cloud-based software, employees have 24/7 access to timecards, paystubs, PTO balances, and a host of other HR data. Indeed, there is no reason for employees to call HR for any of that. After all, your employees use modern apps every day in their personal lives. Certainly, they shouldn’t have to use archaic processes at work for tracking time. What does that say about your company?

6. Mobile App

When employees can use their personal devices it ensures quick and universal user adoption for any mobile system. After all, your employees are comfortable using their smartphones and tablets to manage their personal lives, so it’s natural for them to use the same devices at work for timekeeping and HR.

Coupled with employee self-service, a mobile tracking app takes cloud-based convenience to another level. Mobile and remote employees can clock in and out with their phone–wherever they are working. GPS tracking and geofencing give managers additional oversight for offsite workers. Certainly, if you want to account for each work hour, rely on an easy to use mobile app.

7. Finger or Facial Scanning Clock Integration

If you have employees working onsite, your time tracker should sync with hardware clocks. Advanced verification clocks save your labor budget from buddy punching–one of the worst kinds of time theft. In addition, clocks with custom prompts gather information at clock in. Job codes and wellness checks, for example.

Types of Time Clocks for Small Business

1. Spreadsheets
2. Card punch
3. PIN entry
4. Card or Fob
5. Magnetic Card
6. Scanning
7. Mobile and Web-based

Clocks for small business come in a wide range of types and styles. Small teams use them to track time and attendance. Employees use them to clock in and out for shifts. In like manner, they track breaks and meals.

Spreadsheets

While this isn’t technically a ‘clock,’ it’s a common timekeeping method for small business employers. Generally, managers record work time for each employee. Some users create overtime and PTO formulas as necessary.

Card Punch Time and Attendance Clocks

Firstly, I am only including a review of punch clock technology as a warning. If you are still using a card punch system, the rest of this article is especially important for you.

Card punch is a device introduced in the late 1800s. If you have a punch card machine it’s time to upgrade. Let’s move on…

PIN Entry

With this type of time clock, the employer assigns a unique code to each team member. Employees enter a code to punch in and out for their shift. PIN clocks have been a popular option for small business employers for many years.

Magnetic Card

In contrast to a touchless prox card, card swipe clocks use a magnetic card. As with the proximity type, the card identifies the employee. However, the employees must swipe the card through the reader on the clock.

Scanning Time and Attendance Clocks

A scanning employee time clock uses a unique physical attribute. The attribute, or identifier, confirms an employee’s identity. Common biometrics include finger scans, palm prints, iris scans, facial and voice recognition.

Equally important, timekeeping software powers biometric hardware.

In addition, verification clocks are often connected to an access point such as a door or gate. Activating the clock opens the door. This helps avoid missed punches because the employee can’t enter the workspace without clocking in or out.

Mobile and Web-based

Web-based clocks work through a web browser on a computer. Workers can clock in from any internet-connected device.

They clock in through a secure web page. Each employee has a unique identity for login. Web clocks usually run in the background while an employee works.

Geofencing

With geofencing, managers can create a ‘fence’ or a geographic area and assign to one or more employees. If an employee punches in or out outside the fence, the system will notify the manager.

Talk to an Expert at WorkforceHub

At WorkforceHub, time and labor has been our superpower since 2001. Over one million employees punch in with our solutions  every day. To schedule a demo, visit our site today.

See also:

• Employee Time Clock Hardware
• HRMS Success: How to Manage Human Resources
• Best Employee Time Tracking System to Replace Punch Card Clock
• Predictive Scheduling Laws: What You Need to Know
• 7 Ways an HR Portal Can Transform Your Business
• 5 Practical Tips for Managing Your Hybrid and Onsite Workforce
• Destructive Employee Absenteeism: Improve Your Attendance Tracking
• Managing Employee Attendance (SHRM)

Resources:

• The Kentucky CPA Journal, Fall, 2007, “Biting the Hand that Feeds: The Employee Theft Epidemic” by Terrance Daryl Shulman, JD, LMSW, ACSW, CAC, CPC
• American Payroll Association
• Nucleus Research

Updated November 7, 2022.