Chronoblog
Category: Automated Reports
New Series: Avoid These 8 Major Pitfalls to Succeed In Your Business

remote, hourly employeesIf you’re driving down a major highway and see a massive crater in the road, surely you would stop, right? Or at least go around it. It is said, “A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences.” As a small business owner with remote, hourly employees there are many pitfalls on your road to success. You may be aware of many, but some may be in your blind spot.

Over the next few weeks we want to highlight a few potential pitfalls that you can easily avoid with the correct tools. Some of these pitfalls are:

  • Relying on handwritten time cards for employee hours used for payroll.
  • Not paying travel time to remote, hourly employees when the law requires it.
  • Paying employees for work not really done.
  • Getting fired by clients because your remote, hourly employees don’t show up to scheduled jobs.
  • Losing money on jobs because you’re not accurately tracking labor hours.
  • Exposing your company to labor board disputes because you aren’t accurately calculating overtime.
  • Failing to properly pay California overtime.
  • Spending more time on payroll than acquiring new customers.

 

As a remote employee management system with thousands of customers across the U.S., Canada and Puerto Rico, we have heard a lot of horror stories from other small business owners. In this new series, we will outline the solutions we have for each pitfall listed above. These solutions will keep you safely on the road to success.

Stay tuned and stay in touch by following us on Facebook.

Converting Time – Hours to Minutes

Businesses go through this every month, every 15 days, every two weeks, every week,  and I have even heard from a few businesses that do this every day!  The task consumes a ton of time and you didn’t envision it in your dreams of small business ownership. Worse yet, your ability to enjoy and grow your business is diminished by this task.  It’s the task of processing payroll. I’m specifically referring to the head-pounding practice of using handwritten time cards and then converting time to calculate payroll hours.

Payroll companies require labor hours in a decimal format.  Converting time from hours and minutes to the decimal format needed for payroll, requires us to use a 60-base number, not the usual 100-based math we are used to.  It is not easy and can lead to costly errors. For example, 5 hours and 35 minutes is not 5.35 hours. Do the math.  5.35 hours is actually 5 hours and 21 minutes.  The calculation is .35 x 60 = 21 minutes or 21/60= .35. I talked to a business owner recently who had an employee complain about her hours. She thought she was shorted. She was right. The owner made the mistake I just outlined. She took the example of 5 hours and 35 minutes and submitted 5.35 hours to her payroll company;  for every shift for every day for 2 weeks.

A common practice for admins who calculate hand written time cards is to round hours (not recommended), so that converting time  is easier.  Know your state laws.  This may not be legal.

To show this in the terms we know let’s look at the basic time conversion (see the last row in the chart):

  • 15 minutes is a quarter of an hour, .25
  • 30 minutes is a half of an hour, .50
  • 45 minutes is three quarters of an hour, .75
  • 60 minutes is one hour, 1.00

 

Converting Time Chart

Feel free to print the chart as a reference when you are faced with the challenge of converting time manually.  If you are a small business owner who must manually convert time for payroll hours calculations you might consider letting a timekeeping system do that for you.  Chronotek can also calculate Overtime, even for semi-monthly and the special California Overtime rules.  When a system does the work it will not matter how often you do payroll and the risk of error is greatly reduced.  Free up your time. Eliminate your payroll headache and revitalize the small business dream you once had. We believe that you will also save money when you stop using handwritten timesheets.

Stay tuned and stay in touch by following us on Facebook.

Are Your Numbers As Good As You Think?

Job Cost Reports

I beat my son on Wii Golf the other day 40-47 on 9 holes. At first glance, one might think that my son is awful, while I am the next Rory McIlroy. The numbers are convincing. On average I beat him by a stroke on almost every hole. I could market this version of the truth and sell it to a naïve buyer. But let’s dig deeper before we make the purchase. How did we compete on a hole by hole basis? Ah… a different story comes to light. I only beat him on 5 holes. He beat me on 4. It was a tight match until the last hole and he was ahead going into it. The 9th hole was a train wreck for him. As a small business owner, you may ask yourself the question, are your numbers as good as you think? This question may create some uneasiness if you don’t have good job cost reports.

Some small business owners may look at the end of the week numbers and think that life is good. They made payroll, paid all of the bills, and there’s money left over for groceries. Time to uncork the champagne, right? What if you could dive deeper into the numbers? Let’s say that you have 10 customers and you could easily run the numbers for each one. The analysis reveals that you’re losing money on 5 customers, breaking even on 2, and only 3 are profitable. These 3 customers are profitable enough to bring your total bottom line into the black, which disguises your problem with the 7. But in-depth job by job cost reports aren’t easy to get – unless you use our online employee time clock for labor hours.

Our time clock app and employee call in system allows your employees to clock in and out of different jobs. You get accurate hours for payroll, and for job cost reports. The Weekly Labor Cost report is a job cost report that breaks down total weekly hours by job, and then by employee. See how many weekly hours were worked at each of your 10 customers compared to their budgeted hours. The report also shows the labor dollars spent at each job site. Compare the dollars spent against the dollars budgeted for each job. And because this is a WEEKLY job cost report, you catch any issues quickly. The report shows if any employees hit overtime on these jobs. Not just overtime, but on which job and how many overtime hours on each job. This is extremely valuable information. Overtime hours cost you at least 1.5 times more at these jobs. Just shift your employees around to avoid overtime next week.

One final golden nugget is that the Weekly Labor Cost report allows you to enter a labor rate multiplier to get a REAL labor cost for each job. You may pay $9 an hour, but that’s not your total cost. Add in 7.65% for your share of the payroll taxes and maybe 2% for worker’s comp, and that $9 an hour employee is really $9.87 per hour. If you neglect to factor in these numbers, you will be about 10% off across the board.

Our Weekly Labor Cost report eliminates the uneasy feeling that guesswork causes and gives you enlightened, true numbers that help you understand your small business better. This job cost report provides targeted, real data that is broken down and helps you devise a plan of attack for the rest of the month. If you need a clearer grip on the “real” truth about your business that accurate job cost reports can provide, sign up for a free trial with us.

Legendary golfer Ben Hogan said, “The most important shot in golf is the next one.” This may be true of your next business decision, also.

Stay tuned and stay in touch by following us on Facebook.

 

What Picture Do Your Labor Numbers Paint?

blog-what-picture-do-your-labor-numbers-paintThe paint by numbers sets were so much fun as a kid. Just follow the pattern established by the numbers and you could paint a beautiful picture. Numbers are funny that way. They can paint pictures that are worth more than a 1000 words. If you are a small business owner with off-site hourly employees and you’re not minding your labor cost dollar numbers closely, the picture they paint may not be very pretty.

Let’s look at some numbers.

You started out with a target labor cost of 50% for the job.  You spend an entire day gathering payroll data and putting numbers in a spreadsheet. Not only is this number gathering wasting your precious time, but because you don’t utilize an automated time tracking system your labor costs are 70% of revenues and you eke out a 10% profit. The struggle is real.  But why are labor costs at 70%?

In studies done by the American Payroll Association and the Robert Half Agency, it’s shown that employees steal 10 minutes a day.  (It’s extremely easy to take an extra 10 minutes a day when using handwritten time cards.)  Employees can write down whatever clock in, clock out times they want.  You’re lucky if it’s only 10 minutes a day. But we’ll say 10 minutes a day using an example of 15 employees – that comes to 150 minutes a day or 3262.50 minutes a month (54.375 hours) based on 5 day work weeks.  Chronotek’s new Weekly Labor Cost Report can calculate your actual Labor Cost for you automatically.  The report also takes into consideration the fully loaded pay rate.  So if the employees’ pay rate is $8/hr, it might be that you are actually paying close to $9/hour considering taxes and workman’s comp.   So you’re throwing $489 out the window every month on these handwritten time cards (that hurts a little bit).

Instead, embrace the wonder of technological accountability with an automated timekeeping system and take back your money.  An investment in our system of $89 a month for 15 employees yields a return of $400 back in your pocket.  That’s 4.5 times your investment and raises your net profit by 25%.  If you pay your employees more than $8 an hour, then you’re making more money faster.

It’s time to get your money back.  No more unearned pay and no more laborious spreadsheets.  This is why we created the new Weekly Labor Cost Report that enables you to track true labor costs (pay rate + payroll taxes) against your labor budgets.  A picture is painted using the exact numbers.

Stay tuned and stay in touch by following us on Facebook.

Know Your Labor Cost

blog-remote-employeesWell-known financial advisor and motivational speaker, Suze Orman asked her audience how many had personal debt, of any kind.  Almost 100% of the people in the audience raised their hands. To paraphrase her response she said, “So you all have debt, and you come here asking me to show you how to manage money you don’t have?” Such a poignant question. Just like families who discover that they don’t have enough money to pay their bills each month, many small businesses with remote, hourly workers struggle to make payroll, and pay their vendors and other overhead expenses.

It is hard for small businesses that aren’t efficiently tracking their largest monthly expense: time worked by hourly employees.  Our clients have the advantage when they use the new Weekly Labor Cost Report. This report quickly calculates true labor costs (pay rate + payroll taxes) compared to the job’s labor budgets.

In an interview we did last year with David, the owner of a successful janitorial company, he stated that a service business can pay up to 50% of their gross revenues in payroll, but it should not exceed that number.   However, we have talked to several small business owners who estimate that they pay up to 70%, and they struggle for a 10-15% profit margin.   Profit margins and hourly payroll expenses are tied together in a constant, unequal tug of war.  This results in cash flow problems at the very least.

While Suze tries to help her crowd manage money they don’t have, we want to help small businesses reclaim the money that is rightfully theirs. Run the new Weekly Labor Cost Report  to stay on track. It’s an easy step towards getting your dream back as well.

Stay tuned and stay in touch by following us on Facebook.

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