Time and Attendance Software and Return on Investment

Time and Attendance software reduces repetitive manual tasks found in manual payroll systems hence, the return on investment. These manual systems need time card collection, correction and calculation. And each of those jobs have to be overseen by a payroll manager, too. Manual systems experience more errors and always reduce productivity. If these mundane tasks can be cut or streamlined, your employees can focus on doing more specialized work to improve your business. 

Here, exploring some data from the American Payroll Association (APA) we will see how automation can save your company time and money. 

Quick Figures for the Time and Attendance Software ROI Exercise 

Let’s start with a quick look at a pretty typical business. Here, we’ll be using some statistics provided by the American Payroll Association, as well as some conservative estimates. 

  • How many employees currently punch in and out on a time clock? In our example, we’ll use 500 employees. 
  • What is their average hourly rate? $16.00
  • What is the payroll managers hourly rate? $16.00
  • How many minutes does it take to review and total each time card? We’ll use 3 minutes (the APA estimates 7 minutes). 
  • What is the hourly rate of the person reviewing the time cards? $16.00
  • What percent of the calculation of time cards is inaccurate do to improper rounding, calculation errors, transposition errors and improper application of payroll rules? 2% (the APA estimates between 1% to 8%). 
  • How many standard hours do your employees work in a pay period? 40 hours
  • How much time per employee do you lose each day due to: long lunches, early departures, breaks, supervisor rounding, tardiness, and incorrect totaling? 20 minutes (the APA estimates 49 minutes per employee per day). 

Time and Attendance Software Saves Money for Time Card Audits 

Studies have shown that manual calculation of time cards takes approximately 7 minutes per card each pay period. In our conservative estimates, we’ve assumed it only takes 3 minutes per card. Automation will reduce that to 1 minute per card or far less. By switching to an automated system, you’ll be saving at least 2 minutes per time card, if not more. 

  • 2 minutes saved per card × 500 cards = total savings of 1000 minutes each day. 
  • Total minutes saved in a regular work week = 5000 minutes
  • Total minutes saved in a regular work week / 60 minutes = 83.3 hours saved weekly. 
  • Payroll managers rate × hours saved weekly = $1333.33 weekly savings. 
  • Monthly savings (4.33 weeks × weekly savings) = $5773.33
  • Yearly savings (52 weeks × weekly savings) = $69333.33

Lost Time Can Be Recovered with Automated Time and Attendance Software 

Lost time (or time theft) savings consists of wages recaptured by the systems rounding and restriction capabilities. The average weekly theft (long lunches, tardiness, etc.) is 49 minutes for each employee according to the APA. Here, we’ve estimated a conservative 20 minutes. 

  • Daily lost productivity = 20 minutes / 60 minutes = 0.33 hours
  • 0.33 × average employee rate = $5.28 in wages overpaid daily. 
  • Multiply by 5 days = $26.40 in wages overpaid weekly. 
  • Multiply by number of employees = $13,200.00 in total wages overpaid weekly. 
  • Multiply by number of weeks in an average month (4.33) = $57,156.00 in total wages overpaid monthly. 
  • Total wages overpaid weekly × 52 weeks = $666400.00 in total wages overpaid yearly. 

Automatic Time and Attendance Eliminates Errors 

Studies have shown inaccuracy in the calculation of totals to be between 1% and 8%. In our examples, we have used 2% error factor to be conservative. Even if just 2% of calculations are erroneous, your business may end up paying thousands in no-time. Using automated time and attendance eliminates errors and adds to your savings. 

  • Number of employees × average hourly rate × average hours worked weekly = total weekly payroll expense: $320,000.00
  • The total weekly savings from the elimination of errors is the total weekly payroll expense × the 2% human error factor: 
  • Weekly payroll × 2% error factor = $6400.00 in weekly savings. 
  • Weekly savings × 4.33 weeks in an average month = $27712.00 in monthly savings. 
  • Weekly savings × 52 weeks = $332800.00 in yearly savings. 

Total Savings Summary 

  • Weekly audit savings = $1333.33
  • Weekly error savings = $6400.00
  • Weekly wages recaptured = $13,200.00
  • Add the above three numbers to find the per weekly payroll savings, $20,933.33
  • Weekly savings × 4.33 weeks in an average month = $90,641.33 in monthly savings. 
  • Weekly savings × 52 weeks in a year = $1,088,533.33 in yearly savings! 

Automating the time and attendance process for your employees with integrated punch clocks can save your organization hundreds of thousands of dollars each year. Even in our conservative example, we’ve shown a savings of more than one million dollars in the first year. 

How Much Can Your Company Save? 

  • 10 Employees: About $4,000 per year. 
  • 25 Employees: About $10,000 per year. 
  • 50 Employees: About $20,000 per year. 
  • 100 Employees: About $40,000 per year. 
  • 500 Employees: About $200,000 per year. 
  • 1000 Employees: About $400,000 per year. 

And that’s based on conservative estimates! Automated time clocks and efficient software provide a quick return on investment by saving time and money with your workforce. 

As you can see, small numbers add up very quickly to make big headaches if a company isn’t utilizing automated payroll systems. If you add these savings up, even a small company will see a return on investment within a year. 

Contact us to learn more about our self-service automated employee time and attendance systems, built to fit your company’s requirements and flexible enough to be deployed anywhere. Our goal is to protect your business from losing time and money to inefficiency.