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What's the Best Timeclock for Your Small Business?

Andrew Martins
Andrew Martins

If you have hourly employees on your staff, you're going to want an accurate count of the hours they put in.

  • Nearly every company can use a good timeclock, though what makes one better over another depends largely on a business's needs.
  • Time fraud is a common enough occurrence among employees that GPS or biometric-enabled timeclocks can potentially save a business thousands of dollars in lost wages.
  • In our research, we found timeclocks were largely affordable, with some options that are available to lease, if needed.

As a small business owner, you more than likely understand how proper resource management can often mean the difference between a thriving business and one that struggles. While cash flow, supplies and inventory are all manageable resources that should immediately come to mind, one of the most important things small business owners need to be aware of is time.  

If you've ever come dangerously close to a deadline or rushed to meet a quota, you understand how time management has a direct impact on your productivity. As you add more people to your staff, their hours worked – and by extension, their productivity – can be measured with the help of either a physical employee timeclock or a timeclock app. Couple that with the fact that timeclocks can integrate with payroll software, and you have an important tool that could potentially save your business thousands of dollars.

As with most modern business tools, a lot of factors matter when trying to determine the best timeclock for a small business, since there are numerous options available. Whether you want a biometric-enabled timeclock physically installed on-site or a cloud-based solution that your employees can use to clock in and out while on the road depends largely on your business's structure, payroll system and needs. As you search for the right timeclock solution for you, here are some questions to consider before committing to one option over the other.

Editor's note: Looking for the right time and attendance system for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

Why is an employee timeclock so important for small businesses?

If you don't have employees lined up at the start of your business, or if your employees aren't working on an hourly basis, then it makes sense to hold off on a time and attendance system. However, most early business models require some form of hourly labor, so as your staff gets larger and more people contribute to your company, you're likely going to want to implement some sort of time and attendance software solution.

Timeclocks are important for small businesses in some major ways. First and foremost is the fact that timeclocks are a fair and equitable way to ensure your employees are being paid what they're owed. A goodtimeclock and attendance software appcan also make tasks like employee scheduling and payroll much easier for managers.

Additionally, timeclocks can help reduce the risk of employee fraud and time theft by highlighting inconsistencies in a worker's clock-in and clock-out habits. According to a survey of 1,000 employees by QuickBooks, 49% admitted to committing time theft, with 46% admitting to "adding between 15 and 60 minutes" to their timesheets. Shockingly enough, 3% said they added more than an hour of additional time to their timesheets. That kind of either willful or accidental malfeasance can cost a business thousands of dollars in wages and lost productivity.

Another important function of timeclocks is accurately tracking your payroll. Being able to easily implement your paid time off policy among your part-time and full-time employees in an easily understandable way makes for a seamless workflow. Many timeclocks allow you to program your payroll policies into its parameters, automatically handling any required calculations and reducing the amount of time you have to spend on payroll.

A good time-tracking app will also alert you to any attendance inconsistencies that crop up. Sometimes employees show up to work late, leave work early or are regularly "sick" on certain days. While some of those instances can be coincidences, some people take advantage of a lax attendance policy. Given the fact that frequent absenteeism costs your company money by potentially driving up labor expenses, implementing a system that lets you identify and deal with problems as they happen can be a huge time and money saver.

Speaking of labor costs, most modern timeclocks offer real-time data. Once implemented, time and attendance software can show you which positions are using up the most time, what your overtime costs are and how your business is comparing to industry standards. With that type of information at your fingertips, you can adjust as needed to keep your labor costs at a reasonable level.

What kind of timeclocks are there?

Just as there are countless types of businesses out there, there is a range of time and attendance monitoring options out there to meet those varying needs. Physical devices installed at a central location, while seemingly old school in nature, are still relatively common in some workplaces. More mobile work environments, however, have eschewed the classic punch-card system for app-driven models that let employees accurately calculate their hours worked regardless of where their office may be that day.

In light of their differences, here are some of the different styles of timeclocks available on the market today.

Punch card timeclocks

As was previously mentioned, the punch-card style of timeclock has been around for a long time. Going back as far as the turn of the 20th century, punch-card timeclocks still see regular use in some workplaces. These devices work by requiring an employee to insert their timecard into the device to be stamped with the exact time their shift starts and ends. Then a manager gathers all of the timecards and manually inputs the shifts into the company's payroll.

Since this is a decidedly analog method of timekeeping, managers are required to make sure the data they enter is accurate, resulting in more effort and time needed to get payroll done.

Key cards/barcode/RFID timeclocks

The next step up in terms of technological ability is the timeclock that relies on a key card, barcode or the use of radio frequency identification (RFID) technology. In these systems, the employee usually has an item that they keep with them at all times, like an employee identification badge that doubles as a key they swipe to start their shift. Whether it's a barcode that gets scanned or an RFID card that users tap or place near a dedicated scanner, this style of timeclock is usually connected to time-tracking software that automatically logs an employee's shift.

While largely seen as an easier and faster way to count an employee's time on the clock, it also requires that those same workers have their card or identification on hand. If they lose the credential or leave it at home, then that can cause headaches for management. Another issue is that magnetic strips tend to wear out on swipe cards, so those have to be replaced over time.

PIN or password-based timeclocks

Just as with nearly every online account, some timeclocks require employees to input a username and password when they start and end their workdays. Some devices even require a personal identification number (PIN) be inputted instead, with the technology often working as a second form of identification to other entry methods like a barcode. The main issue with this system crops up when people forget their credentials.

Biometric timeclocks

It may sound like some sci-fi technobabble, but biometric timeclocks are a fairly commonplace piece of technology these days. For the uninitiated, biometrics use a person's unique physical qualities to log in or access certain systems. The most common example of biometric technology is the fingerprint reader on many new cellphones. While that tech is great for keeping prying eyes away from your cellphone, it's even better for businesses worried about "buddy punching" when it comes to time and attendance systems.

Other forms of biometric systems include interactive voice response and facial recognition. The former requires workers to call a predetermined number and answer certain prompts in order to clock in and out. This format isn't that popular anymore, since they're usually replaced with a mobile device app. Facial recognition software also relies on a person's unique physical features, but cheaper models can be circumvented with a simple photograph of the person.

App-based/online timeclocks

Most people always have a smartphone with them, so it only makes sense that many workplaces today use an app-based or web-based timeclock system. This method is most appealing to businesses who don't want to pay for or lease a physical timeclock for the office or those that rely on remote workers. Most modern payroll services come with either an online timeclock or separate app that employees can download and use at their own discretion. Some of those apps can also include "geofencing," which only allows the app to work within a specified area or records their exact location when they were clocking in and out. Perhaps the biggest boon to this kind of time-tracking solution is that most people are inherently familiar with how to use an app on their phone.

While this is likely the easiest and most convenient kind of timeclock for most small businesses, it's also the easiest platform for workers to commit time fraud and time theft.

How can I deter time theft?

Time theft is a major concern for most small business owners. Unless you're implementing a strict timeclock policy among your workers and adopt a clock-in process that eliminates the possibility of people fudging their hours each week, then you're going to run the risk of employees gaming the system. As previously mentioned, many employees are guilty of this, and whether you care about losing out on a few minutes here and there if your company is performing well is ultimately up to you.

If you're worried about the thousands of dollars you could lose to time theft, it's imperative that you set a strong time and attendance policy that outlines the repercussions for dishonesty on a time card. With a strong policy and effective timeclock system in place, you can at least work to mitigate potential losses.

Are timeclocks affordable?

The out-of-pocket costs associated with a good time and attendance software program depends largely on the type of system you're looking to implement, along with several other factors. If you're going with a software-based solution, you must consider if you're going to host it on your own servers or if it's going to be hosted remotely. You also must factor in the number of employees that will use the system, the features you want and if you need a physical timeclock installed at your office.

Most timeclocks and attendance systems are charged on a per-employee basis, meaning most vendors will charge you for each person on the system, regardless of their title at your company. According to our research, cloud-based time-tracking systems can "range anywhere from $1 to $10 per employee, per month" though the average was between $3 and $5 per employee. A base fee of between $20 and $100 can also be charged. There may also be a monthly minimum, meaning you will have to pay at least a certain amount regardless of if you have a large-enough workforce to meet that minimum.

Additional fees can include installation, setup and training fees, which vary based on the providers and your needs. Our research found some vendors charge anywhere between $100 to "several thousand dollars" for such fees.

On-premises systems are significantly more expensive upfront. According to our research, we found that such systems can cost anywhere between several hundred dollars to more than $10,000 for the software. Some even charge licensing fees once again based on the number of employees on the system.

As for physical timeclocks, these devices can cost upwards of several thousands of dollars to purchase and install. You're also going to have to spend more on physical items, especially once your employees use up your supply of paper timecards. You can also buy or lease a timeclock, though that will depend on the vendor and how much money you want to spend on the system each month.

Whether you go for a physical, in-office timeclock or opt for a more modern and digital approach, having accurate information about your employees' hours is invaluable for small business owners. With the right amount of data, you can not only optimize your bottom line, but you can ensure that your employees are the most efficient and effective group for your company.

Image Credit: EyeOfPaul / Getty Images
Andrew Martins
Andrew Martins Staff
Andrew Martins has written more than 300 articles for and Business News Daily focused on the tools and services that small businesses and entrepreneurs need to succeed. Andrew writes about office hardware such as digital copiers, multifunctional printers and wide format printers, as well as critical technology services like live chat and online fax. Andrew has a long history in publishing, having been named a four-time New Jersey Press Award winner.