The Definitive Guide to
Time Clock Software

time-clock-overview-no-hats-1Labor is a huge expense for any company, so tracking employee hours is important.

But the best way to track those hours varies by industry and company. It also depends on if the employee is classified as salaried or hourly. Some companies and industries require hourly employees to log in and out each shift via a time clock. Others may require employees to track their hours via time sheets, which can be time-consuming and prone to errors.

The challenge is finding a time and attendance solution that makes it easier to track employees’ time (and stay within overtime regulations) and that best fits the needs of the business.

This is where our Definitive Guide to Time Clock Software comes in. Here, we detail the types of time clock software, along with common features, benefits and challenges, and what to look for when making a purchase.

Free Report: Learn how to find the right Time Clock Software with our 2016 Buyer’s Guide – Download Now

Time Clock Software Overview

Time clock software (also known as a time and attendance solution) is automated software that tracks employees’ time worked as well as their vacation and sick leave. It’s either a stand-alone solution or a feature within a human resources management system (HRMS). Sometimes it can integrate with a project management solution (e.g., Replicon) for professional service businesses that typically bill clients for time spent on tasks. Stand-alone time clock software integrates with payroll solutions for ease of payroll processing.

The history of time and attendance solutions began in the late 1800s when the first time clock tracked the hours of factory workers. Time clock hardware evolved over the years until the 1990s when time and attendance software debuted, according to Redcort Software.

Today, time and attendance software is more than a way for employees to log in and out. It provides managers with the ability to track and approve employee leave (vacation, sick, etc.). Managers can schedule employees for specific shifts (common in service-based industries), and it also has reporting features for managers and executives to track attendance trends.

Did You Know: ISGUS is a current time clock software vendor with a long history that dates back to 1888.

Time clock software is typically deployed either on-premise (installed on a company’s server) or in the cloud (data hosted by the vendor). Some software vendors provide an integration to physical time clocks either as a standard feature or as an add-on.

Time clock software comes in a variety of types – some are intended for all companies, but have pricing plans specific to company size. Others are intended only for specific business sizes (e.g., small businesses or large organizations with multiple locations). Also, there are a few solutions dedicated to the service industry, such as PeopleMatter SCHEDULE.

Who Uses Time Clock Software?

Time clock software can be used by any company, regardless of size. However, it’s more dominant in specific industries that employ and schedule hourly workers, such as food service or retail. It’s also common for professional services (e.g. creative agencies, law firms) to require employees to track their time for billable hours to their clients, such as with project-based work. Also, companies that have remote employees or multiple locations can benefit from a time and attendance software for ease of tracking time.

Did You Know: 19% of employees surveyed by Synerion admit to clocking in and out for a co-worker, also known as buddy punching.

Types of Time Clock Software

There are a variety of options available for time tracking in both hardware and software forms. We’ve listed a few of them below:

Punch card: The punch card is the traditional way of tracking hourly employees. Employees simply place a card into the machine. The card then records the time and date when the employees clocks in or out. Punch cards also record the total hours worked per day and per week. They’re still used by businesses today, especially small businesses. However, punch cards have their challenges, such as being prone to inaccuracy and time theft.

Digital time clocks: Digital time tracking is a step up from the punch card clock. Instead of punching in with a punch card, employees can clock in via a magnetic-stripped card, punching codes into a touchpad or a computer terminal.

Biometrics: Biometric time clocks are more advanced than traditional time clocks since they use facial or other physical recognition (e.g. fingerprint, handprint or eyes) when employees clock in or out. One main advantage of biometrics is that they eliminate the issue of buddy punching.

Web-based time clock: For businesses that don’t want a physical time clock, there are Web-based recording options. Employees can punch in or out via the Web with a unique user identification and password. Some Web-based solutions also rely on the IP address of the computer to reduce the chances of an employee logging in from a different computer.

Did You Know: According to the Biometrics Research Group, revenue for the biometric time and attendance market is forecasted to hit $600 million by 2018.

Popular Features

The main function of time and attendance software is to record time worked by each employee. However, it also has other features that benefit both employees and the business as a whole. We list them below:

Attendance tracking: With this feature, companies can track their employees’ attendance, whether they arrive to work late or call out sick. Similarly, this feature also helps managers track employees’ overtime in accordance with overtime regulations.

Employee scheduling: This feature helps managers schedule their employees for specific shifts (more common in places other than offices, e.g., retail). Businesses can also use the employee scheduling feature to assign tasks or projects. Also, employees can request specific shifts (or offer to cover another employee’s shift) within the software.

Vacation/sick/leave tracking: Many solutions include the ability for employees to manage their own vacation and sick leave balances, and send time-off requests directly to their managers. Managers can also track all employee time-off requests and approve/reject leave as needed.

Messaging: Some time clock software has a messaging feature for employees to communicate with their managers if they’re running late or calling in sick. The messages usually are in the form of emails. However, When I Work allows managers and employees to communicate via text, as it integrates with a text-messaging service.

Reporting and analytics: Many software vendors include reporting functionality in time tracking. It helps managers better track attendance with real-time data and to spot any issues. Users can also pull reports on sick/vacation leave data per employee or data on hours worked for payroll. Depending on the software, users can create reports from built-in templates or customize their own reports.

Pro Tip: For ease of scheduling employees, look for solutions that either include a built-in calendar with reusable templates or integrate with an online calendar (such as Google Calendar or Outlook Calendar).

Key Benefits

Using a time clock software comes with several benefits, such as:

Eliminating manual time tracking: Filling out paper-based time sheets can be time-consuming, especially for professions that track billable hours. In addition to the time spent figuring out what hours were used for which projects, there’s also a chance of errors and inaccuracy that can impact revenue. Also, many time clock solutions include the ability to request and approve time off as well as track balances of vacation and sick leave. Including these features makes it easier for managers and employees to keep electronic records.

Eliminating time theft/fraud: Businesses need to ensure their employees are recording their time accurately because time theft and buddy punching contribute to high labor costs. Most time clock software uses a unique employee identifier (e.g. physical recognition, password on IP address) that shows when and where an employee clocks in, which cuts down on time theft.

Helping managers schedule shifts/assign projects: In addition to tracking time and attendance, some vendors offer scheduling capability within the software. Managers can create schedules for shifts or assign deadline-oriented tasks and projects to employees. The scheduling feature tends to include standard schedule templates. Some allow users to create customized schedules for future use.

Ease of processing payroll: Many time clock solutions integrate with a payroll solution (or both are part of a single workforce management solution) so payroll processing is easier. There’s no need for duplicate data entry, which minimizes payroll errors.

Compliance with overtime and other labor laws: It can be difficult for businesses to comply with federal and state labor laws, especially in the case of overtime. Many time clock solutions have rules set up for what constitutes overtime (typically over 40 hours per week) and alerts the user if employees are reaching the threshold.

Did You Know: Time theft costs employers roughly $400 million a year in lost productivity, according to the Kentucky CPA Journal.

Challenges

Just as there are benefits to using a time clock software, there are also challenges, including:

Getting buy-in from top executives: Getting buy-in from top executives can be challenging, as they may feel it makes more sense to purchase an HRMS (or a project management software that includes time-tracking features) than a dedicated time clock software because of limited resources for managing multiple systems.

Getting buy-in from IT: Getting buy-in from IT is also a challenge, as they’ll have concerns on security and software hosting. If the company prefers an on-premise solution, IT may feel there aren’t not enough resources to host and maintain the software. Or if the company prefers a cloud-based solution, IT could have concerns about security.

Lacking the features a company needs: Accounting/HR would have the most concerns about having the right features, as some time clock software differs based on company size. Some features may be needed that aren’t offered (e.g. time clock hardware option), or the software may have features that aren’t necessary for the business.

Lack of integration with existing systems: Having time clock software integrate with an existing system is important so all data is in one place, especially with payroll solutions. Although most vendors have the ability to integrate time and attendance with payroll, some do not, so businesses may have to keep this in mind when evaluating vendors.

Pro Tip: If your business tracks other HR functions aside from payroll and time and attendance, and wants to save money on managing multiple software, consider purchasing an HRMS.

Market Trends

Change in overtime pay: In May 2016, the Obama administration released a new rule regarding overtime pay. Previously, employees who regularly worked overtime and whose gross salaries were higher than $23,660 were exempt from overtime pay (overtime being over 40 hours a week). The new rule raises the overtime threshold to $47,476 effective December 1, 2016. Many businesses may have to restructure their employee base, converting salaried employees to hourly employees, or forbid employees from working overtime and hire temporary workers to pick up the slack. The new rule makes it critical for businesses to monitor overtime for not just hourly employees, but salaried ones as well – which makes overtime tracking an important feature for time and attendance systems.

Mobile workforce: Many businesses have employees who work in the field, travel frequently or telecommute full time. It can be a challenge to ensure they’re clocked in and/or monitoring their hours worked. An increasing number of time and attendance solutions have included mobile capability (either as a Web browser or as an app) as a feature. Employees can log in and out, check their schedules or submit time off requests via their mobile devices. Some solutions even include a geolocation capability that ensures employees are where they say they are.

Cloud-based deployment:  In the past, time clock solutions were traditionally installed on a company’s on-premise server. Similar to other software, now time clock systems can also be based in the cloud. Cloud-based solutions (also know as Software-as-a-Service) are hosted and maintained by the vendor, so businesses with limited IT resources no longer have to worry about maintaining the solution or purchasing equipment. For businesses that prefer a physical time clock, some cloud-based solutions include one.

Pro Tip: To stay in compliance, look for a time clock software that has built-in warnings to alert companies if an employee is approaching overtime.

Buyer’s Guide: What to Look For

Before purchasing time clock software, it’s important to figure out what features you’ll need. You’ll also want to figure out if a dedicated software works for you or if an HRMS is a better bet. Also, consider your employee base – for example, some solutions are targeted specifically to companies with many hourly employees. It’s a good idea to have a checklist with your requirements ready before looking at vendors.

Be sure to consider these key factors before making a purchasing decision:

Cost – Time clock software is offered at many different price points. When comparing prices from different vendors, be sure to take the desired features and various deployment methods into account. Cloud-based solutions are often cheaper than on-premise software. It’s also important to know what’s included in the base price for the solution. Some vendors charge extra for certain features, and some vendors provide scalable price plans. Others offer implementation, support and training at an additional cost. Keep this in mind when asking for a price quote.

Scalability – Do you envision hiring more employees? Or are you a large organization with employees in multiple locations? If so, you’ll need a solution that has the ability to scale up or down. Or you want to make sure the solution you’re looking for can support an unlimited number of employees.

Ability to work with existing hardware, databases and systems – It’s important to find out whether the software can integrate with existing systems (e.g., accounting or payroll), especially if it’s an on-premise solution.

Input from users – All affected parties need to buy-in to the new solution, including top executives, HR and IT. One way to do that is to get those users involved in choosing the system – for example, have them participate in software demonstrations.

Demo of the solution – Getting a demonstration of the solution can help you see how it works – and how it can fit into your company’s operations. As another way to test the software, some vendors offer a free trial before purchase (typically for 15 or 30 days).

Training and support during and after software implementation – Know all the details about training options during the implementation process. Can the solution be easily used by non-technical employees? If not, does the vendor offer additional training? Choose a vendor that can provide training at your convenience, if possible – for example, having a rep conduct training sessions for multiple users onsite. Also, make sure the vendor provides support after the software is deployed, such as 24/7 tech or customer service support on the phone or Internet. Along with investigating support and training options, be sure to ask about any security procedures (e.g, how the information is kept secure), especially if the vendor hosts the solution.

Request to speak with vendor’s current or past customers – It’s important to seek references from a vendor’s existing or previous clients. The vendor will give you the names of most positive clients, but ask for companies that have similar needs to yours (e.g., small office or a businesses with multiple locations). When contacting the reference, ask if there have been any issues with the vendor or the software. You’ll want to get input on not just the positive experience, but issues as well. Also, if the vendor has been in business for less than five years, it’s especially important to get references from its clients.

Pro Tip: If you’re currently using time clock software and plan to purchase a new solution, you’ll want to make sure data from your old software (such as employee vacation and sick leave balance) can be automatically transferred to the new solution.

Top Time Clock Software Solutions

When it comes to time tracking, companies have plenty of options to choose from. But finding and selecting the right time clock solution is no easy task.

To narrow down your search, we’ve listed and profiled some of the most popular time clock systems: