Employee overtime is sometimes unavoidable. Big projects come up and the work has to get done and the overtime must be paid. But it should never become a routine part of a small business plan. A company that pays overtime every week can save 1/3rd by hiring a part-time employee. Another proven method to cutting down or eliminating overtime is utilizing technology for accurate timekeeping.
We would like to toss a few numbers at you to illustrate why overtime is toxic for your small business…and how we can help. Who likes people who only highlight problems without offering solutions anyway?
As an example, let’s say that your small business has 15 full-time hourly employees. On average their hourly pay rate is $9. Your weekly payroll is $5400 or $280,800 annually. But what happens if each employee works just one hour of overtime each week? That’s 15 hours x $13.50 an hour=$202.50 a week and $10,530 a year. That figure comes straight off your bottom line. Factor in payroll taxes and the numbers are even more painful to your profit margins.
You could hire a part-time worker to cover those 15 extra hours a week at $9 an hour for $7020 a year. That’s a $3500 annual savings and sounds like a grand idea, right? We have an even better one.
In our blog article, Minding Your Minutes, we referred to an article that stated companies lose on average 10 minutes a day to employee time theft because they use outdated methods to track time. This article also referred to a study that showed that using technology such as ours can decrease overtime costs by 59% (as a percentage of payroll). Our system captures indisputable accurate time for timecards because it simply captures the punch-ins and punch-outs based on phone calls made by your employees. It’s that easy. Your employees call a toll free number, put in a code and we capture their time.
Back to our example. Let’s assume that our system works effectively and eliminates all of your overtime and saves you the $10,530 a year plus payroll taxes. What will that cost you? If your 15 employees work 2 jobs a day 5 days a week, your monthly cost would be $175 a month or $2097 a year. That represents a savings of overt $8400 versus paying the overtime.
Implement our system instead of hiring a part-timer to eliminate overtime and we will save you over $5000 a year (and we are much easier to manage). And oh yes, those pesky payroll taxes must be factored in, also.
How does that sound for a solution to your overtime problem? It’s more than shallow talk. We’ve seen it work for our customers for almost 20 years.