To understand the answer to what is a timesheet, one needs to look no further than the word. Technically, a timesheet is a piece of paper used to track the time each worker spends on a job. This traditional method now comes in digital formats.
Employers use a timesheet to track hours worked, leave time, accruals and to make adjustments when processing payroll. Pay periods vary by employer. Common forms include:
Electronic timesheet software provides a trackable workforce solution. Workers submit their timesheets, which are automatically forwarded to supervisors for approval. Either an outsourced payroll vendor or in-house department processes the data.
What is the Objective of a Timesheet?
Beyond entering time for hours worked, a timesheet fills other objectives related to business processes. The timesheet is a valuable method to record and track how much time each employee spends working.
Hours worked provide reporting information to supervisors. They can view the labor hours required for specific positions and tasks. This information helps with scheduling, assigning tasks and determining hiring needs.
With its primary use for payroll, employers can ensure employees are paid accurately. Most companies only require timesheets from nonexempt employees. This allows employers to track and pay for hours worked according to regulations such as the Fair Labor Standards Act.
Law firms and accounting firms may also use timesheets to track billable hours per clients. Another objective is within companies that choose to use timesheets for exempt employees. Doing this can help to track salaried employees’ sick pay and vacation time.
Why Use a Timesheet to Track Employee Work Hours?
The importance of timesheets for employees is something every company should consider. This time tracking method establishes proper synchronization between the number of employees and productivity levels.
Software for this process empowers supervisors to arrange scheduling without errors commonly associated with manual processes. Supervisors can track performance and make effective departmental decisions.
The flexible use of timesheets does more than calculate payroll. Now, this method of tracking employee time is also useful for management accounting. Managers can record start and end times for tasks, and identify problematic ones that may delay completing projects. A detailed breakdown of each task is also useful for different projects.
A major use for timesheets is in a project management environment. Increasingly, employers see benefits of timesheets for costing and estimation of projects. Additionally, managers can compare planned costs versus actual costs for different projects and programs.
This information helps with current projects and planning future ones. Knowledge of performance and usage of the workforce can drive corporate strategy. Whether employee productivity decreases or they are engaging in unprofitable work, managers will have a clear view with information collected in a time tracking system.
How Timesheets Work
The timesheet process is possibly the least glamorous task at any company. Despite the monetary compensation attached, few employees enjoy incorporating clocking in and out into their work days. This explains the design goals of electronic software programs that involve a small number of clicks to complete.
Before companies begin using timesheets, time periods are defined in the system. Most have a self-service module for employees to enter their time after supervisors set up parameters. These may include the work week, shift hours and overtime categories. Once these parameters are set, each employee receives login information.
Administrative tasks are also part of the electronic timesheet. Holidays, training hours and administrative projects, for example, might be part of the system. This largely depends on the needs of the employer.
Employees enter the hours they work before submitting it for approval at the end of each pay period. Customized fields allow them to enter time for specific tasks, projects and activities. After entering their time, employees submit their timesheet to the supervisor for approval.
Supervisors, project managers or client representatives may have approval authority. They review time entered and will either approve or reject the timesheets. Any rejected timesheet is sent back to an employee for correction. Approved timesheets are forwarded to payroll processing.
Once approved, management can continue to use the data for a variety of purposes. Some of these examples include:
• Bill clients
• Calculate labor costs
• Track productivity
• Monitor projects
• Create department budgets
• Forecast future needs
• Determine profit
Electronic Timesheets for Contractors
Some employers may still question what is a timesheet and its purpose with contractors. Typically, contractors are not subject to the same rules as regular employees. Keeping track of the time they work for companies may follow an unconventional path.
Nevertheless, companies need to ensure they are paying contractors properly. Timesheets are a way to avoid illegal or lost information connected to these positions. Even when contractors work seasonally or at multiple locations, one centralized time tracking module can help to secure accurate payroll data.
Employment classification is the primary distinction for employees and contractors. Electronic timesheets are an alternative to tracking both classifications. By giving contractors access to the online system, they can enter time worked without the messy manual tracking of hours.
Tracking time accurately, whether for regular employees, mobile workers or contractors, helps to reduce payroll costs. Employers have a more efficient system for each category of workers. They have a visual representation of what it takes to have a productive labor force.
Timesheets have progressed from the days of only providing payroll details. The same information used to pay employees fairly is just as useful for developing business strategies. From web-based to desktop timesheet software, electronic timekeeping solutions help companies manage labor hours and payroll.