What is a Timesheet (And How Do They Work)?

Company leaders must know every aspect of their team's workflow to remain profitable. If you find yourself asking, "What is a timesheet?" you have some work to do.

Without any record of working hours or clock-in and clock-out times, it’s next to impossible to reward good behavior. It also becomes difficult to identify late, missed, or abandoned shifts. This chaos can also lead to safety, legal, and financial issues.

In this guide, you’ll learn about the importance of timesheets. We’ll cover various formats, compliance standards, and technology that can streamline the process. But first, let’s understand the time entries that make up employee timesheets.

Time entry is the process of recording arrival and departure times for a given shift, usually on a timesheet. 

Employees are typically responsible for recording their own hours. When an employee arrives to start a scheduled shift, they clock in to record the start time. At the end of a shift, have them clock out and record end times.

Any edits or adjustments to work hours recorded on a time card or timesheet must reflect the actual number of hours worked (as closely as possible) to comply with workforce labor laws.

Utilizing timesheets as a workforce scheduling and tracking tool is common across all industries and business types. It comes as no surprise that timesheets are useful for improving workflows. Timesheets help organizations: 

• Eliminate wasted time

• Improve payroll processing

• Enable PTO bank accruals and withdrawal tracking

• Delegate responsibilities

• Create accurate invoices

• Maintain industry standards that comply with break time laws.

Let’s take a more detailed look at how you can leverage timekeeping tools to your advantage.

Know how time is being spent and reduce wasted time

Knowing exactly how employees spend their time during the workday is the first step in reducing wasted time and saving money.

Tracking the project or task hours of both individual workers and teams informs future project forecasting. Collecting the number of hours worked on any given task provides a clear view of the efficiency of your workforce. This then allows managers to take appropriate measures to improve production capacity and efficiency.

Time tracking is also beneficial for monitoring freelancers' hours. This helps companies identify situations where freelancers' billable hours are excessive compared to industry norms or internal benchmarks.

Payroll processing

Timesheets expedite the payroll process considerably. Accurate clock-in and clock-out times become the basis for calculating work hours. Managers can use manual or automated methods to tally these hours for more accurate payroll. This data also helps teams create accurate client invoices.

Track employee time off and accruals

Timesheets help human resources, management, and employees keep track of PTO and other time off accruals. Automated time management solutions log time accrued and time used as the worker earns it. When employees use leave, the software automatically deducts from the current balance.

Stay compliant with work schedule laws and regulations

Federal law does not require companies to provide workers with rest breaks. However, Department of Labor standards require employers who schedule breaks to consider the break time as compensable work time.

However, there is a catch: Fair Labor Laws instruct employers to follow state laws and regulations for lunch and rest breaks.

For example, employees who work four hours or more must receive a ten-minute break in California. The timesheet must reflect a full ten minutes. No rounding up is allowed.

State laws also govern how many consecutive hours employees need off between shifts. To complicate employee scheduling further, there are state-specific scheduling laws for minors (the age also varies by state). Even exempt and non-exempt workers vary by state.

Even at a glance, helping your HR department remain compliant becomes a real challenge. Automated time tracking simplifies compliance by sending alerts to HR teams when workers exceed scheduled hours or fail to take scheduled breaks.

Since 2016, the Department of Labor has recovered almost $200 million in back wages. Don’t become another statistic. When companies take the time to train employees on how to record time accurately, it saves them time and money. 

Improved project management and resource allocation

We now know that staying compliant with all federal, state, and local laws is essential to avoid lawsuits and sanctions. That said, timesheets can also aid project management and resource allocation strategies to prevent these legal issues. 

Using timesheets and time tracking apps to see time logged on previous projects gives companies a realistic glimpse into how long future projects will take. With this data, project managers and HR teams can create schedules for each workweek.

Time data informs project budgeting and forecasting models when utilized as a project management tool. Automated time logging can also improve billing and invoicing processes.

Accurate and automated billing and invoicing

When billing and invoicing processes are based on actual employee hourly rates, clients will see more accurate, detailed invoices. These invoices also go out faster for improved collection rates. This then results in faster payments and improved cash flow.

Clients get answers faster when workers spend less time preparing statements and invoices. This allows them to manage their finances better and make decisions that prolong their relationship with your company.

Timesheets are not a one-size-fits-all solution. There isn't one specific timesheet that is perfect or realistic for every company.

Selecting the ideal type of timesheet your business uses depends on many factors. The best timesheet for your company may be a biweekly timesheet that records clock-in and clock-out times for a two-week work period or a daily timesheet for temporary workers.

Below are some examples of different types of timesheets and their benefits.

Timesheets for salaried workers

Timesheets for salaried workers are less important to companies’ actual payroll processes, but they still provide many benefits. Salaried workers may use a daily timesheet, weekly timesheet, or monthly timesheet, depending on the information a company wishes to track.

Time logged is valuable for:

• Allocating labor costs to various profit centers

• Calculating overtime PTO for non-exempt salaried workers

• Boosting productivity by exploring how much time is spent on different activities

• Evaluating employee performance for annual reviews

• Attendance and absenteeism monitoring

Daily timesheets

Daily timesheets are well-suited for businesses that rely on time-tracking data for invoicing and billing processes. For example, an exterminator may use timesheets to bill clients for a one-day job.

Access to a daily time record that shows hours spent per client is excellent for monitoring employee performance. Managers can also use the data when building schedules for their field service teams.

Weekly timesheets

Weekly timesheets record clock-in and clock-out times for a seven-day workweek. Sometimes, this style of timesheet may only record time worked. Other times, it will indicate:

• Vacation time

• PTO used

• Sick days taken

• Unpaid work hours

• Holiday time

The weekly timesheet format allows management to view weekly pay for these categories and ensure the employee did not violate any scheduling rules.

Bi-weekly timesheets

Bi-weekly timesheets work similarly to weekly timesheets except that they track worker data for a 14-day period rather than a seven-day period. Here are some benefits for companies choosing this type of timesheet:

• Less admin work

• Less record-keeping during payroll processing

• Better long-term attendance tracking

• Reduced storage space for physical copies

Monthly timesheets

A monthly timesheet is excellent for sales teams and other employees who track monthly commissions. Instead of paying out commissions on a weekly or bi-weekly basis, companies can pay employees at the end of each month for better cash flow.

Monthly timesheets are also helpful for consultants, independent contractors, and others who take on projects month-to-month.

There are two basic methods of managing timesheets: manually and digitally.

Manual systems don't always work perfectly. Sometimes, an employee accidentally forgets to clock in or clock out. Fortunately, timesheet templates can help offset some of these issues.

When the time card does not reflect an employee's time working, a supervisor, department manager, or HR team members may adjust the time entry data. Some time entries may require a manager's signature to verify the number of hours recorded is accurate.

A timesheet can be inaccurate if an employee exceeds the number of work hours scheduled without prior approval. Or, employees might fail to adhere to established break and lunch times.

Unfortunately, there are times when employees work together to commit time theft by clocking each other in and out to make it appear that schedules were followed.

Manual time tracking methods can cause problems because they are:

• Tedious to use: They typically use paper timesheets or punch cards and a mechanical time clock.

• Require basic training: Employees are responsible for recording their own time, including break periods and lunchtime.

• Create more admin work: Using timesheet data to inform invoicing and billing processes may be a hassle, costing employers more time and money.

• Subject to human error: This includes forgetting to clock in or clock out and data entry errors.

• Vulnerable to time theft: Time theft and other intentional timesheet falsification is more likely with manual timesheets.

The other option is a digital system. Intelligent time tracking software offers key capabilities like:

• Idle time detection: Intuitively monitor active and idle worker times

• Payroll integrations: Use integrated online timesheets that automate calculating employee wages (no manual spreadsheets required)

• Detailed reporting: Generate reports that can be used to calculate employee performance and efficiency based on time employees log

• Automatic calculations: Break down hours and calculate pay based on the type of work (regular hours, overtime hours, PTO, sick leave, etc.)

• Track time to tasks: Monitor working hours spent on each project or task, then approve timesheets automatically 

• App and URL usage: Identify time spent on non-work activities such as browsing the internet or checking social media

• Invoicing: Generate invoices automatically based on employee timesheet data

• Better security: Reduce storage requirements with cloud-based options and secure backups 

As you can see, the benefits of digital time tracking software far outweigh the benefits of manual timesheet options. From saving money and time to gaining deeper insights into workforce performance, digital time tracking software helps growing businesses.

When comparing digital timesheets and time tracking software, keep these features in mind:

• Automated timesheet creation and smart approvals

• Intuitive time-off requests and approvals 

• Compatibility with various operating systems and devices

• Powerful integrations with payroll and HR management tools

• Sleek UI/UX with a small learning curve 

• Easy-to-use functionality to simplify clock-in and clock-outs

• Automated reminders and hourly limits to reduce overtime and missed shifts

• Versatility for freelance, remote, in-office, and field teams

Hubstaff is an excellent timesheet app that offers all these features. It helps employers monitor employees' workflow, manage client billing efficiently, and control employee time.

If you're looking for timesheet software with intuitive timesheet data and insights, sign up for a free 14-day trial to see how our technology works.