Jeremy Sacco
BuyerZone.com Editorial Staff

The employee time clock was invented over 100 years ago - are you still using a time clock from that era? Here are a few reasons why time clocks are out - and time keeping software is in.

The time clock was born when the Industrial Revolution created the need to track the pay for hundreds or thousands of workers. The concept was simple: A clock attached to a mechanical stamp recorded the time an employee arrived and left on a card, creating a record that could be used to process payroll at the end of the week. And that was good enough for almost a century.

How does time keeping software work?

Basic time and attendance systems provide routine tracking of employee log-in/log-out times, just like time clocks. However, instead of stamping a card, employees simply swipe a magnetic card through a reader or sign in on a computer. At the end of the pay period, each employee's hours are automatically reported to Human Resources, eliminating errors and reducing paperwork.

Some systems include alternate ways to clock in and out. To avoid "buddy punching," where employees log in for each other, some companies offer biometric input devices: instead of using a card, employees use their fingerprints or handprints. Companies with remote offices can even let employees use touch-tone telephones or the Internet to report their hours.

Salaried workers don't need to punch in and out - but processing their payroll does require information about sick days, vacation, holidays, and more. Most companies rely on administrative staff to enter that information, but a growing number of companies use software that lets employees enter their information directly, including flex-time hours, vacation time and sick day information.

Benefits of replacing your time clock

By collecting employee data into a database, time clock software provides several benefits. First, of course, is more accurate time tracking and less work for your HR department. In addition, managers get easy access to employee data, plus tools to audit the information for accuracy. Most time clock packages also offer schedule management, which allows supervisors to create and maintain a schedule for each employee. In addition, supervisors can set rules for scheduling staffers, including setting break times, holidays, and even whether overtime is allowable. With most systems, you can even track tardiness and patterns of absenteeism.

Time clock software can also have a dramatic effect on time theft. "Time theft" describes the practice of employees over-reporting the amount of time spent on the job. This can be as innocent as employees who round up the amount of time they have been at work or who stretch a break to last longer than scheduled. Even 5 to 15 extra minutes per day can add up to an extra week of pay per year per person. Multiply this cost across all your staffers and you can see how much it can affect your profitability.

Is time clock software affordable?

Time keeping software vendors and resellers offer packages suited for almost any size business. Companies with fewer than 25 to 40 employees can get simple time and attendance software, including basic reporting and connections to payroll systems for under $500. Considering that new time clocks cost almost that much, it should be an easy decision.

Time clock software can also have a dramatic effect on time theft. "Time theft" describes the practice of employees over-reporting the amount of time spent on the job. This can be as innocent as employees who round up the amount of time they have been at work or who stretch a break to last longer than scheduled. Even 5 to 15 extra minutes per day can add up to an extra week of pay per year per person. Multiply this cost across all your staffers and you can see how much it can affect your profitability.

For companies with hundreds or thousands of employees, time and attendance software usually starts at several thousand dollars, but typically includes more features, more robust reporting, and can be more extensively customized for your business.

Modern time and attendance software can make you wonder how you ever got by with your old fashioned time clock. Many companies achieve positive ROI within a few months of their initial investment.