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One of the few business applications able to provide a genuine return on investment is the automated Time and Attendance System . This is particularly true when it comes to businesses of more that 100 hourly paid employees.

The return on investment comes from three main areas . Reducing employee time theft, eliminating payroll calculation errors and reducing payroll preparation time.Lets discuss these in further detail.

Depending on the circumstances the introduction of a time clock can have a significant impact on employee time theft. Introducing biometric technologies will prevent your staff from clocking in for each other or, in the case where the time records are a paper system,falsifying arrival and departure times.

There are payroll errors in every company . Minor errors in calculations are common in the payroll preparation process but they are usually only reported when they disadvantage the employee. This means that these mistakes are a net cost to your business.

Reductions in payroll preparation time provide a definite saving in time and money . A fully automated time and attendance system interfacing directly with an electronic time clock and exports payroll hours to your payroll software will save a valuable amount of time. If you have enough staff to justify more than one payroll employee then it is certain that you will be able to reduce the payroll staff down to one employee. Clearly this is a dramatic reduction in your payroll preparation costs.

Many believe  the savings can amount to 3 to 5 percent of you annual payroll. In my view this is an overstatement but even  a saving of 1 percent of the annual payroll in a company with 200 employees is very significant. Lets do the math.

200 employees averaging $600 per week X 52 weeks per year = $6.2 Million in wages. 1 Percent of that is $62,400. The saving is of course every year while the cost of a fully automated time and attendance system is likely to be less than $30,000 depending on the number of punch clocks  (employee time clocks) required. This is an excellent return on investment .

Does this sound too good to be true ?  Time theft may not be an issue in your business. Your payroll may be performed by one person who rarely makes mistakes and would not necessarily utilize the free time made possible through automation. If this is the case you would be in an absolute minority . So if we can concede that your saving would only be one half of one percent than the saving would be $31,200 per year for a company with 200 employees.

Even if the savings were not this significant and the reduction in payroll costs were only enough to recover the investment cost over 4 years you would have put in place a new business system which provides a more efficient and secure record storage and, by capturing the knowledge in the heads of your payroll staff (the award rules in your business). You have now effectively reduced the dependency on your payroll staff and of course exposure to the loss of your payroll staff.

In summary, an automated time and attendance system has a lot to offer your company both in improving the efficiency of your admin and accounting processes and reducing the overall cost of your payroll.

James Bell

Time and Attendance Consultant