The true cause of timesheet errors and how to avoid them

44 percent of small businesses say their biggest time tracking struggle is timesheet errors

Getting employees to clock in on time, collecting timesheets, manually entering time data for payroll, correcting timesheet errors: These are just a few examples of the major challenges business owners face in the time tracking world. But a 2018 study conducted by QuickBooks Time revealed that 44 percent of business owners struggle with timesheet errors most of all — some of them on a weekly or even daily basis.¹

Inaccurate timesheets can result in unnecessary payroll costs and administrative burden, two things small business owners with tight budgets and even tighter schedules simply can’t afford. Some business owners blame their time tracking system for these ongoing mistakes — about 8 percent say their current system is too confusing or unreliable — but 92 percent of business owners speculate user errors (or how the time tracking system is used) are the more likely cause of timesheet errors.

Fortunately, there are a few easy steps business owners can take to ensure employee timesheets are as accurate as possible — no matter what system they use to track time.

The Great Debate: Paper versus electronic timesheets

Almost half (45 percent) of survey respondents say they use an electronic time tracking system to track employee hours. The other 55 percent rely on physical punch clocks, paper timesheets, spreadsheets, or word of mouth to track hours. But how do these systems stack up in terms of timesheet errors?

Deterring time theft

Time theft occurs when an employee pads their timesheet at the beginning or end of their shift — and it costs U.S. business owners over $11 billion each year.

44% still time-theft prone

Almost half of employers who use a non-electronic time tracking method say they always or sometimes experience time theft within their business.

67% feel safer from time theft

Meanwhile, well over half of business owners who use electronic time tracking systems say they rarely or never experience time theft.

Labor costing accuracy

For the majority of small business owners, labor is their biggest line item. Employees cost more than just their hourly wage, and for business owners with tight margins, accurately predicting labor costs can mean the difference between success and failure.

14% say labor costing is difficult

Employers who use a non-electronic time tracking system say they always have difficulty comparing estimated labor costs with actual labor costs.

7% say labor costing is difficult

Only 7 percent of business owners who use an electronic time tracking system say they always have difficulty comparing estimated labor costs with actual labor costs.

Managing forgetful employees

Employees forgetting to clock in or out is a common problem among small business owners — one that creates extra administrative work and can result in costly timesheet errors.

13% say employees forget to track hours

Employers who use non-electronic time tracking methods say their employees always forget to track their hours.

9% say employees forget to track hours

Only 9 percent of employers who use electronic time trackers say their employees always forget to track their hours.

Curbing micromanagement

Just over 5 percent of employers require their employees to track time by verbally checking in with a manager. Another 28 percent track time using a paper timesheet or spreadsheet.

16% say employees feel micromanaged

16 percent of employers using non-electronic time tracking methods say their employees feel micromanaged.

9% say employees feel micromanaged

Only 9 percent of employers using electronic time trackers say their employees feel micromanaged.

Sending accurate paychecks

Another 2018 QuickBooks Time survey revealed 10 percent of employers admit to removing time from their employees’ timesheets. This act, known as wage theft, costs U.S. employees around $22 billion each year.

15% of employees say they’re never paid accurately

Nearly 15 percent of employees who use non-electronic time tracking claim they’re never paid accurately for their hours worked.

8% of employees say they’re never paid accurately

Only 8 percent of employees who use an electronic time tracking system say they’re never paid accurately.

Preventing early clock-ins

Only 14 percent of business owners allow their employees to clock in whenever they start working. The majority (51 percent) require employees to clock in no sooner than five minutes early.

2x more likely to let employees work off the clock

Employers utilizing non-electronic time tracking methods are nearly twice as likely to allow their employees to work off the clock before they clock in.

Early clock-ins are avoidable

Employers using electronic time tracking methods can often configure their systems to avoid early clock-ins.

The true cause of timesheet errors? Not reviewing time.

According to the timesheet errors survey, only 9 percent of business owners can say they never have problems with timesheet errors. Some 40 percent deal with timesheet errors at least once a week — and 13 percent say they struggle with errors at least once per day.

Is their time tracking system to blame? Some employers (about 8 percent) think so, saying their current system is confusing or unreliable. But the majority say user errors are more likely the case. When asked about the most common cause of timesheet errors, 34 percent of business owners agree that employees forgetting to clock in or out or record their hours is the biggest problem. Employees not recording time to the correct job or task came in at number two.

Here’s where it gets surprising: Over 15 percent of business owners claim that most of their timesheet errors stem from employees or managers failing to review their timesheets before they submit them for payroll.

Brooklyn Daron, a Learning and Development Specialist at QuickBooks Time, says a significant portion of customer service calls she fields could be avoided if employees would review their time before hitting “submit.”

“It’s so much harder to fix a timesheet error once it’s been submitted for payroll,” Daron says. “It takes just a few seconds to make sure the timesheet is correct and spot any potential errors before submitting. It gets a lot more complicated once it’s been entered into the payroll system. It’s a lot of unnecessary cleanup for the administrator — and we know they don’t have time for that.”

According to the survey, only 21 percent of small business owners require employees to check their timesheets before they’re submitted for payroll, while 15 percent require both the employee and their manager and/or payroll/HR rep to take a look.

That leaves 59 percent — the majority of small business owners — who do not require employees to review their timesheets. This might be a big reason why 66 percent of business owners report dealing with timesheet errors between once a month and multiple times per day.

3 ways to reduce timesheet errors

Dealing with timesheet errors is just one of the many hassles small business owners deal with all the time. But there are a few things business owners can do to reduce the frequency of timesheet errors.

1. Employees should always review their timesheets

If a time tracking system allows for it, employees should be permitted to review their timesheets for accuracy before they’re submitted for payroll. Not only will this reduce timesheet errors (and lighten the administrative burden of correcting those errors), but employees can rest easy knowing they’re getting paid exactly what they’re owed. Managers and supervisors can add yet another level of security by approving employee timesheets before they’re submitted for payroll.

2. Employers and managers should set clear time tracking rules and expectations

If employees aren’t tracking time correctly — either because they don’t understand how or refuse to learn — it’s most likely because there aren’t clear time tracking rules and expectations. New (and old!) employees should be trained on how to use the time tracking system and should know it’s a necessary practice. Meanwhile, managers should set clear expectations by outlining the company’s time tracking process in the employee handbook. Remember, when time tracking rules and regulations aren’t enforced consistently, timesheet errors are bound to happen.

3. A clear system for editing timesheets should be established

Allowing employees to edit their own timesheets can be a good solution for avoiding timesheet errors. If an employee forgets to clock in or out, they can correct that error on their own. But not all business owners are comfortable giving employees complete control over their timesheets. This results in a heavy administrative burden on the back end.

“Business owners can pretty easily get inundated with timesheet editing requests,” says Daron. “Consider recruiting the help of a trusted manager or supervisor to avoid becoming overwhelmed.”