Chronoblog
Category: Labor Cost
#1 Business Pitfall to Avoid: Handwritten Timesheets

clock in, clock out handwritten timesheetsLet’s acknowledge that sick feeling you get each time you do payroll with handwritten timesheets. These unmonitored and unverified hours on handwritten timesheets are your #1 business pitfall to avoid and will be the first topic in our new series, Avoid These 8 Major Pitfalls to Succeed In Your Business. Employees are the core of any service-oriented small business and payroll easily eats up 50-70% of the revenue pie. For this reason, your most important task at hand is getting accurate hours for your remote, hourly employees. This pitfall is bad, but how bad can it be?

Handwritten timesheets suck up company profits like a Dyson. First, is the potential for human error (or fraud) on 2 sides of your business. Employees fill out handwritten timesheets and your payroll administrator calculates the hours. Second, is your payroll admin’s time to manually collect, organize, calculate and total every timesheet every pay period. A study by the American Payroll Association found that companies could easily save 4-6% on payroll (or more). Just switch from handwritten timesheets to a virtual time clock. This savings is based solely on the difference between time captured with a virtual clock in, clock out system versus the time written down by employees on timesheets. It doesn’t consider what you pay your payroll admin to handle the timesheets. A switch to an online time clock could easily push the needle to a 10% payroll savings based on these 2 factors alone. If you struggle to pay the bills now, a 10% savings is monumental. We talked to a business owner a few years ago while he was on our 30 day free trial and he made a major discovery. Two of his employees were fudging their timesheets by 30 minutes a day, every day. He immediately let them go.

Businesses must ultimately make money – find an alternative to handwritten timesheets and you lay the foundation for success. By far, the #1 business pitfall to avoid is handwritten timesheets. Put another away, an automated clock in, clock out timekeeping system is the most important tool your service-based business needs. It is the foundational underpinning necessary to avoid the other 7 pitfalls we will discuss over the next few weeks.

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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.

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Run Your Small Business Like Super Bowl Champions

timesheets time tracking GPS tracking footballThe NFL kicked off last night and for many of us it’s the most exciting time of year. Football teaches us many lessons both personally and professionally. For instance, did you know that out of the 51 Super Bowls that have been played, 46 of the winning teams had a franchise quarterback? A franchise QB is someone that the NFL team sees as the future of the team and builds the team around him. He is the cornerstone of the team. Think Tom Brady, Aaron Rodgers, Drew Brees, Ben Roethlisberger or go a little further back to Brett Favre, Terry Bradshaw, Roger Staubach. All Super Bowl winners. Small business owners with remote employees can learn something from these teams. Every company with remote employees should have a key cornerstone piece to their business practices to help control labor costs.

This cornerstone piece isn’t a person, but a process or practice. Labor costs are the single highest expense for any service-based business. We have written before that labor costs can easily be 50% of revenues and many businesses with remote employees struggle to stay under 70%. Small business owners must diligently employ all best practices to close the gaping hole that company profits are falling through. The cornerstone for companies with remote employees is an automated, online, clock in, clock out employee timekeeping system. The accurate time captured by a time clock app or a phone call compared to handwritten timesheets can save a business 6% (or more) on payroll. This changes the game.

Another significant factor to inflated labor costs is when a company pays a worker and the employee isn’t on the job site working. It’s called time theft and we can toss a penalty flag at it. We actually do flag clock in, clock out events if employees are GPS tracked somewhere other than your job site. Now you’re not in the dark any longer. It’s a great tool to add to your playbook. What if your employee clocks in at the job site, but then leaves while on the clock? Don’t fret. We’re working on a defense for that as well.

You can run your small business like Super Bowl Champions. Just like those teams, you need the cornerstone piece that’s the foundation for your growth. When up to 70% of your revenue goes to pay labor, your MVP (Most Valuable Practice) is to implement an automated clock in, clock out timekeeping system. Start using an accurate game clock today. It’s free for 30 days. Consider it your preseason.

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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.

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So Close – Real Solutions to Your Business Problems

remote employee time clock Finding real solutions to your business problems can be like raising teenagers.

You walk into the kitchen and on top of the counter sits a stack of used paper towels,  paper plates and food wrappers. Right there just about 12 inches above the waste basket. So close to doing the right thing!

Or you pass by the laundry room and see an assortment of your teenager’s dirty clothes littering the floor at the base of the empty laundry basket. So close to doing the right thing again!

Now that’s our teenage children around the house.  What about you, the small business owner with remote hourly employees?  You found this blog because you did an internet search for a solution to one of your business problems. Maybe you’re sick and tired of employee handwritten timesheets.  You beg employees to turn them in and when they do, they are half-completed or illegible.  And worse yet, you just don’t trust them and the padded hours are a drag on your bottom line.   Or maybe you’ve had jobs missed because of employee no-shows.  Maybe you are here for an easier way to monitor and control overtime. Or you lost money on a couple of customers because the labor hours got off-kilter and you need a live, automated way to track job hours. Is it that your method to handle employee paid travel time and mileage involves late nights, expresso shots, interpreting handwritten scribbles and verifying every travel trip manually with a mapping program?

You are so close to a solution if you are here for any of these reasons. Chronotek has a remote employee time clock that solves all of these problems.  Employees clock in, clock out with a tap of the app or make a phone call.

This simple act of punching in and out of our remote employee time clock (or not punching in) is live, actionable information we can deliver to you when you need it:  no-show text alerts; overtime and weekly labor cost reports; dynamic, up-to-the minute job budget tools; automated travel and mileage reports and most assuredly, accurate employee time cards.

Teenagers may never hit the mark , but you are so close to doing the right thing for your small business.   You are so close to real solutions to your business problems. So why not try our remote employee time clock risk free and cost free for 30 days? Go ahead and click the link. You’ve made it this far!

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The Speed of Information

online employee time tracking What you know is surely important, but maybe more critical is how soon you know it.  Knowing that bad weather is coming is much better than knowing that it came and went.  We talked to a janitorial customer recently who shared the importance of the speed of information and how he gets the speed he needs with our online employee time tracking system.

Once upon a time he used employee handwritten timesheets that he gathered and calculated (painfully) every 2 weeks.  On payroll day, he would discover information that he needed much sooner-when it really mattered; when he could have taken action.  He’d stare at a time card that added up to more than 40 hours for each pay week. That’s overtime pay at 1.5 times the normal rate.  He couldn’t do anything about it then, but pay it.  Now with access to live time card information 24/7 with our mobile app and telephone timekeeping system, he can see overtime coming and stop it before it happens.

He also mentioned that in his handwritten timesheets, pre-Chronotek days, he would see shift times at job sites that created concern for him.  A good clean time for a particular customer was 2 hours a night, yet the clock in, clock out times showed work done in an hour for several nights the week before.  The quality of the work couldn’t be good, but that was a week ago.  Now he identifies these events live as they happen.  He uses the app for our online employee time tracking system to monitor clock in, clock outs and if he notices something odd he takes action. When he notices a quick cleaning, he immediately calls the employee to inquire.  Or he catches it the next morning when he reviews the reports from the night before. It is much better than finding out a week later, and that it has happened 3 more times.

Our online employee time tracking system also gives him live, instant information that helps him quickly spot trends. He runs a scheduled versus actual job report each morning and can easily see if a job took too long the night before.  Did something problematic happen that he needs to know about and inform his customer?  Something extra that he needs to bill his customer for?  Or maybe the employee has learned to milk the clock.  An employee should get better and more efficient with experience, not slower, he said.

We love to talk to our customers and hear about their unique experiences.  They teach us valuable lessons on how our system simplifies their lives and makes their businesses more successful.  We hope that you can learn from them as well.  As this particular customer has learned and is capitalizing on, information is often only as good as the speed in which it’s delivered.

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One Second Can Change Your Life

one-second-can-change-your-lifeReally fast high school track stars can run the 55 meter event in about 7 seconds. That’s 165 feet, or just over half a football field, in less time than it takes to reheat a Krispy Kreme doughnut in the microwave. However, the world record time is 5.9 seconds set almost 20 years ago. So the difference between a 2 decade old, hard to beat world record, and really fast high school boys, is about 1 second.   Just one second is the amount of time that separates most competitors from world record domination.  To the uninformed, one second seems inconsequential, but it’s a life-changing difference to a runner.   If you own a service-oriented business with remote, hourly workers, you may not be totally informed about the huge difference that another tiny number can make in your labor cost.

Studies indicate that companies who use handwritten time cards lose at least 10 minutes a day to employees padding their hours. That’s 5 minutes on the time in, and 5 minutes on the time out.  Five minutes seems insignificant until we break the numbers down.

Five minutes lost twice a day, 5 days a week, is 50 minutes a week. That’s 2600 minutes a year. Now the reality check. This equals 43 hours. So the seemingly harmless 5 minute loss on each side of a shift turns into a nice paid vacation that your employees are rewarding themselves.

And you never know the exact time worked when employees fill in their own hand-written timesheets.   It is shocking to learn that  75% of time theft goes undetected.   As a business owner your bottom line feels it.  There is an easy solution.

Shaving a second off the 55 meter dash is virtually impossible, but reclaiming 10 minutes a shift for your business is simple. Our telephone and app-based timekeeping system can save your small business 2-6% on payroll by replacing employee manipulated handwritten time cards with easy-to-use technology.   Since labor cost can be upwards of 50% of a service business’ total expenses, this 10 minute savings can impact profitability to make businesses come out a winner each month.

And it only takes one second, to decide to get started saving money.  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.

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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.

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Handwritten Timecards Are a Money Trap

It’s easy to fall into a money trap. Maybe you drink a Red Bull once a week for an extra kick start on Monday mornings. Who could blame you? Mondays are Mondays. It’s a great $2.50 a week investment. But then you’re strolling through Costco and you see a case of Red Bulls for $32.50. That’s 24 cans at $1.35 each; about half the cost of your convenience store. “What a deal!” you exclaim and run over a little old lady in your excitement to load the case on your flatbed shopping cart. Now what was just a Monday treat is also your “get me through hump day” Wednesday habit and a TGIF fix. The $2.50 a week pleasure has escalated into an indulgence more than double the cost and blew your budget (we won’t mention the health issues).  Likewise, in running a small business, you have to count every cost and if you don’t, the costs will run away from you and torpedo your budget as well.

A study of small businesses revealed that employees steal an average of 10 minutes a day from their employers. This is more apt to happen when remote workers use the honor system to fill out handwritten timecards. You may be aware that this practice occurs in your company, but don’t know how to stop it or maybe you haven’t considered it to be a big deal. It is.

Let’s illustrate…and we will assume that your employees are twice as honest and accurate as the average employee, and you only lose 5 minutes a day amongst each of your 15 employees.  At $8 an hour that’s 13.3 cents a minute x 5 minutes a day =66.5 cents a day per employee. For 15 employees that comes to $10 a day, $50 a week, and $2600 a year in overpaid, unearned, non-productive wages. Ouch! Handwritten timecards are painful!

Counting all of the costs hurts even more!

  • Handwritten timecards that are inaccurate by only 5 minutes a day result in $2600 a year in overpaid, unearned, non-productive wages.
  • Then consider the payroll expenses such as workers compensation and payroll taxes associated with these extra unearned wages.
  • If the average pay rate is more than $8 an hour, your losses are even greater. You are getting nothing in return for these dollars.
  • What’s worse is that you may be cultivating a climate that tolerates dishonesty.

What would you get by utilizing a telephone timekeeping solution that captures accurate time and eliminates the 75 minutes a day waste with handwritten timecards? Let’s review the savings. In our recent blog article, Control Overtime With Accurate Timekeeping, we calculated that if your 15 employees punch into 2 jobs a day 5 days a week, the monthly cost for accurate timekeeping  would be $175 a month or $2100 a year.  That 75 minute a  day, $2600 a year, payroll loss replaced by the $2100 solution nets at least a $500 savings a year (and possibly upwards of $1000 counting workers compensation and payroll taxes) by capturing accurate time with simple toll-free telephone calls. These savings are probably understated as outlined in a blog article entitled, Would You Trade a Quarter if I Gave You a Dollar?

Then consider other tangibles such as no-show alerts that help to not lose jobs and the seamless QuickBooks Interface that drastically cuts processing payroll time (and makes your bookkeeper happy). Make your life simpler at no net cost to your business. In fact, you make money with an accurate telephone timekeeping service.

Don’t allow inaccurate timekeeping methods to be a money trap for your small business. The costs are real, must be counted and can be avoided. Sidestep into simple with real savings.

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