When businesses are just starting out, traditional

practice is to use a manual time keeping system to track

employee time. Employee's fill out a paper time sheet, the

payroll administrator confirms the time sheets, cuts the

checks, handles the government paperwork and deductions,

then deals with overtime, vacation, and requests for time

off.

As businesses expand and hire more employees, this manual

system becomes extremely cumbersome. The steps to

automation start out small - a mechanical punch clock and

pre-printed time cards, and perhaps a switch from manual

time keeping to using a spreadsheet.

But even this level of automation requires a large amount

of manual re-keying of data, and as the number of

employees increases, the more demanding and time consuming

the needs are for your time and attendance and payroll

systems. A lot of businesses become "trapped" with a

legacy system, usually composed of several different

parts, perhaps even with expensive custom programming in

the mix.

Processing payroll is a repetitive and aggravating task

which takes up valuable time from administrative personnel

who should be serving your business in more revenue

generating capacities. Even with the automated steps

described above, errors in payroll calculation account for

nearly 10 billion dollars in lawsuits and assessed fees

annually in just the United States. Some estimates claim

that one in four employers make regular payroll errors,

mostly commonly with insurance or withholding deductions.

Others say this estimate is undercounting the problem, and

that it will only get worse as the tax code gets more

arcane.

The single most common cause of payroll errors is human

error. Especially in systems utilizing paper based punch

clocks or manual time cards, human error (as simple as

double entering figures or transposing digits) can be

extremely costly, and cause the need to do entire

correction payroll runs or issue adjustment checks. Most

payroll errors are in the range of 1-8%, and even at 1%,

when multiplied by the number of employees, can add up to

tens of thousands of dollars of lost income.

Error rates get compounded when paper time cards are

smudged, morning coffee gets split on them, employee's

record their time inaccurately or they just "buddy punch"

for each other. Combine this with the time spent verifing

results, and the time spent processing payroll (an average

of 7 minutes per time card per employee), and you'll see

that much of this could be eliminated if you had an

automated payroll processing system with integrated time

and attendance functionality.

In addition to paying for itself in reduced error rates

and saved time, an automated time and attendance and

payroll system can provide your management team with laser

accurate information about which employees are in on time,

and how many man hours (and dollars) are spent on each

portion of a project, an important part of project

management and cost accounting.

Furthermore, if you ever need to perform a labor audit, an

automated system will give you the total hours worked per

employee per day on any project, in real time. Fully

automated systems also help prevent "buddy punching" and

other schemes that employees can use to cover one

another's absenteeism or tardiness. Such systems give you

the real time data needed to efficiently manage your

personnel.

Ultimately, using payroll software with integrated time

and attendance functionality gives you a more efficient

and streamlined set of business practices, which obviously

benefits your bottom line. From a manager's point of

view, these software packages allow you to view attendance

records by employee, dollars spent on each project, as

well as other valuable information about how your company

runs, all from the comfort of a simple web browser.

These systems can also be used to let your employees

perform "self service" of several routine human resource

tasks, such as checking their time sheets, viewing their

own pay stubs, even arranging schedule changes or shift

swaps, all from their web browser at work or at home.

Given the high cost of payroll errors, most automated

payroll and time and attendance solutions will pay for

themselves in under a year by reducing payroll errors and

saving time for staff. If you assume a company with 20

full time employees that average 10 dollars an hour - say

a retail business - a 1% error rate adds up to roughly

$6500 dollars a year, which is almost always much more

then the software costs itself.