A Guide to Time Tracking and Time Tracking Software

a guide to time tracking and time tracking software

Technology has altered the way businesses manage their workers and track performance. With new capabilities, software solutions provide a way for management to drill down into gathered data and gain actionable insights that improve decision-making across the organization.

One of these technologies is time tracking software, which encompasses all of the various timekeeping mechanisms used to hold workers accountable and follow labor laws.

Both large and small businesses are implementing time tracking apps and software systems to streamline all of their business activities and decrease absenteeism.

Here is an overview of timekeeping and how utilizing optimized tracking tools can benefit both small and large businesses.

What is Time Tracking?

Time tracking refers to the way an organization tracks its employees' work hours and makes sure they are paid accurately and on time. It is an overarching term that usually encompasses time management, attendance, paid time off, scheduling, and billable hours.

Time tracking is broken into three distinct categories-

  • Time Entry- The method that workers use to enter their punch-in data
  • Approvals- HR policies of approving time entries, hours worked, and billable time
  • Reporting- A summary of time track data utilized to encourage time attendance and resolve absenteeism
Many organizations time management software systems to perform time entry, approval, and reporting processes. Time entry includes timestamps, or tracking workers' beginning times, ending times, and lunch breaks or vacations.

HR approval for all simple time entries is essential to maintain accountability and ensure accurate payments. It also makes certain that all labor laws set by the state or federal government are complied with.

Business intelligence solutions can help generate reports that allow management to see which time entry areas need improvement.

Why is Time Tracking Important?

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Here are some of the reasons why time tracking is important for any organization-

1. Pay Accurately for Hours Worked
Employees want a system that ensures they are paid accurately for hours worked. By utilizing time tracking software, workers can feel secure that their paychecks properly convey their punch-in data.

Businesses that use a time tracking tool can know exactly how much money is owed and to whom. They don't have to worry about overpaying or underpaying workers and contractors. Accurate pay per user per month avoids potential penalties by ensuring that all labor laws and regulations are complied with.

2. Set Goals
Insights gained from a time tracking solution can help workers manage their time more effectively. These insights can be used to increase productivity and find more optimized ways to complete tasks.

Some tracking software is excellent for project time tracking and letting workers know how efficient they are working. Employees can also use this time data to see which workers are not being productive and who is using their time wisely.

3. Expense Tracking
Team members can use a time tracking solution to see how money is spent and look for cost savings opportunities. Management can monitor project budgets and re-emphasize tasks to ensure the business is benefitting financially from all of its activities and workflows.

If there is a segment of workers who aren't meeting objectives, businesses can consider re-assigning work or working with unproductive employees to ensure they make improvements. All of these actions will help save money and valuable resources while increasing the organization's competitive edge.

4. Streamline Reporting and Invoicing
Time tracking devices are efficient ways to streamline HR processes, implement task management, and conduct accurate reporting. An automated system saves time by making certain resources aren't wasted verifying hours and calculating overtime pay.

A time tracking project has mobile-based time tracking integration capabilities, so workers can use a time tracking app to punch-in time data themselves. This puts the onus on employees to manage their time and track projects, allowing the human resource department to focus on other tasks.

How Time Tracking Contributes to Productivity

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Time tracking isn't only about logging hours and sending out paychecks every two weeks. Software solutions can collect a plethora of valuable data that generates actionable insights. Management can use these insights to increase productivity, efficiency, and maximize worker talent.

Here are the ways that a time management solution allows employers to manage projects and increase productivity in the workplace-

1. Manage Workload
Tracking punch-in data allows management to see their workers' capacity. It is proficient at tracking project management, shows who is completing tasks, and who need more projects, who is close to burnout, and who needs further assistance to meet goals.

This allows for efficient resource allocation and real-time support from management, which contributes to a more productive workplace.

2. Find Inefficiencies
Tracking time helps pinpoint obstacles to worker productivity. It can show anything from time-consuming weekly meetings to inefficient workflows to lax management styles. Businesses can use these insights to decrease or reassess the processes that contribute to inefficiency across the workplace.

3. Focus on Important Issues
Accurate time tracking allows organizations to focus on their priorities and allocate resources appropriately. It helps management assess whether they are prioritizing the most important processes or taking too much time worrying about invaluable ones.

By seeing how every worker prioritizes his/her time, businesses can make certain everyone is contributing to a productive environment.

4. Automatic Insights
Productivity will increase as a result of utilizing an automatic time tracking solution that generates reports and streamlines HR tasks.

Most timekeeping software provides users a way to track all projects and business activities, log hours and generate timesheets, view a team's activity under one single dashboard, and create reports with powerful visuals that tell a story.

What is Time Tracking Software?

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Time tracking software can refer to different features and systems. The most frequently utilized and best time tracking categories include-

1. Time Tracker
An app that features time tracking as its primary focus is referred to as a time tracker. Workers use it to clock in and out, track their weekly hours, and sometimes request time off. They can perform these actions through their laptop, mobile phone, or sometimes a stopwatch. It also has data analytics and reporting capabilities so management can analyze their collected time data.

2. Timesheet
A timesheet is an online timekeeping system that integrates with payroll systems to provide the HR team with accurate time data on a per week or per month basis. It is typically accessible from a desktop or mobile phone and has cloud-based integration capabilities.

It allows businesses to collect punch-in data from any location, whether it's the office or at home. Like time tracking tools, there are reporting and data analytics functionalities that provide management with further insight into their collected clock-in data.

3. Project Management
Many time trackers are connected to project management databases because completing these projects on time is of paramount importance to the bottom line. Because project management software can integrate with time tracking solutions, project management is still considered a category of time tracking.

Time tracking is capable of-

  • Time tracking- Its main functionality collects punch-in data and documents this information on a timesheet. This is used by the HR clerks to bill clients for projects or pay employees on time.
  • Online Timesheet- A timesheet serves as an attendance tracker that also tracks absenteeism, paid/unpaid holidays, and time-off requests.
  • Project Management- Some time tracking solutions provide project management tools such as setting deadlines for tasks and tracking hours worked on an activity.
  • Invoicing- This feature is essential if some hourly workers or clients bill by the hour. This tracks all hours worked and allows users to automate billing and set specific rates. It converts minutes to hours and calculates wages, taking labor laws and taxes into consideration.
  • Alerts- Most time tracking software alerts management and workers on their tracking apps when there is an update or if they miss a punch-in. It also provides notifications for outstanding tasks or time data discrepancies.
  • User Management- Users can create groups and manage people by department or team. Management can assign tasks to any individual group and then generate reports to see their progress towards achieving certain goals.
  • Reporting and Data- Analytics Users can view a range of data and generate reports related to specific business activities. It provides a way to drill down into data and form insights into why something happened.

Why Businesses Should Use Time Tracking Software

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Both large and small businesses can benefit from implementing a time tracking software system. Reasons to purchase a software solution include-

1. Increases Production
Time tracking allows workers to record their progress towards achieving goals and meeting their required hours.

Employees can use these capabilities to avoid wasting time and remain accountable for the duties outlined in their job descriptions.

Managers can analyze the risks and benefits of assigning projects and assess whether the time it takes to complete them is worth it. The focus can remain on removing those inefficiencies and activities that negatively impact revenue.

2. Increase Accountability
Time tracking solutions ensure accountability and allow management to reward hard-working employees and monitor low-performing ones.

It allows the leadership team to track the progress of different tasks and stay on top of those who aren't finishing their work on time.

This will increase everyone's productivity and enhance company culture while improving worker morale. Those who work will feel appreciated for their work and those who are unproductive will feel pressure to continue improving.

3. Improve Transparency
Software solutions provide transparency about who is completing what, how long it takes to complete it, and why.

This provides a way to reevaluate each worker's required tasks and allocate resources to increase efficiency and productivity. Management can schedule more employees when needed and decrease labor costs by taking hourly workers off the schedule when they aren't needed.

4. Improved Scheduling
The honor system is impractical because there's always one or two workers who try to break the rules.
Larger businesses can't possibly rely on the honor system to track hours as there are too many workers and too few resources to hold everyone accountable.

An optimized time tracking solution allows management to tweak schedules and monitor absenteeism to ensure greater productivity throughout the workplace.

5. Improved Morale
Businesses will see an increase in morale when timekeeping policies are set in place and standardized throughout the organization.

The best time tracking software allows workers to manage their own time and feel more confident that they are paid accurately for their time spent and hours worked. Management can monitor productivity and improve workflows to accommodate workers and increase the bottom line.

Other Benefits of Time Tracking Software

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If implemented correctly, a time tracking solution won't stifle the creativity of the team or make workers feel micromanaged. At the same time, businesses can improve accountability and productivity by monitoring the efficiency of their workforce. Other benefits include-

  • Keep Track of Contractors and Remote Workers- Management can keep an eye on contractors and make sure that resources aren't expended without a return on investment.
  • See Status of Process at a Glance- Time tracking software allows users to see the status of different tasks and performance markers quickly and easily.
  • Track Time Using Different Devices- Time can be tracked by using a mobile phone, laptop, or workplace computer.
  • Compare Projects Over Time- Users can compare and contrast the elements of different projects to see how efficient they are.
  • Raise Rates- Time data can show the charge-out rates for staff and contractors. Businesses can use this information to assess whether they are charging enough.
  • Manage Scope Creep- Scope creep refers to clients who believe they want one service and end up wanting more over time. This increases workload and interferes with the flow of day-to-day operations. Management can use time tracking software to manage scope creep before it happens and work with the client and workers to decrease any inefficiencies or miscommunications.
  • Stay Compliant- Software solution functionality ensures that all payments are accurate and all labor laws are followed. This will help businesses stay compliant with the state/federal government.


In conclusion, here are the key takeaways to remember about time tracking software-

  • Time tracking encompasses time entry, approvals, and reporting.
  • Time tracking helps to pay employees accurately for hours worked, set measurable goals, increase profitability, and streamline reporting and invoicing.
  • Time tracking increases productivity by managing workload, finding inefficiencies, focusing on important issues, and gaining valuable, automatic insights.
  • Time tracking software includes time trackers, timesheets, and project management. Other capabilities include alerts, project management, user management, and reporting/analytics.
  • Businesses should use a time tracking solution because it increases and improves accountability, transparency, scheduling, and morale.
  • Software best benefits include the ability to track contractors, see the status of processes at a glance, use different devices, compare projects over time, raise rates, manage scope-creep, and stay compliant with labor laws.