5 reasons why timesheet is important for Small & Medium businesses?

Timesheets are incredibly important to most businesses. We hope this guide has helped you understand the topic a little better.
  • Author: Siva
  • Last updated: May 23, 2022
  • 10 Minutes
digital timesheet for small and medium businesses

If you’re one of the thousands of workers who track their time on timesheets, you know how tedious it can be to account for every minute of your working day. Tracking time may be monotonous, but timesheets are an essential tool for all businesses. Since the invention of the clock, virtually every profession and industry has measured the value of labour in shifts, hours, and minutes. Timesheets make these measurements possible.

But timesheets aren’t just about registering clocking in and out times anymore. Over the years, they have developed beyond these simple metrics and become an important tool to help businesses record metrics and analyze data.

In this guide will delve into what a timesheet is and how businesses can use them. We will also take a brief trip back in time to see how they have grown. We will also discuss the legal ramifications of timesheets and their many advantages and disadvantages. Let’s get started.

What Is a Timesheet?

A timesheet is a data table that an employer can use to track the time a particular employee has worked during a certain period. Businesses use timesheets to record time spent on tasks, projects, or clients. They can also help with HR tasks like payroll and holiday entitlement calculations.

There are many methods of timesheet implementations available. These include:

  • Paper-based systems. These include things like punch cards and registers. Paper-based systems have gradually given way to software solutions in most modern businesses.
  • Spreadsheet software. The most commonly used spreadsheet software is Excel. The tabular nature of spreadsheets makes them popular for timesheet solutions. By the way, in the meantime, you decide on a good timesheet software, feel free to use our free timesheet excel template. Download for free timesheet template here.
  • Online purpose-built time-tracking software. These software solutions can be expensive but offer a wide variety of functionality beyond other systems.

Why Should a Business Use a Timesheet Solution?

A business can only stick to its budget, meet its deadlines, and be successful when it uses time effectively. To do this, accurate records need to be kept. This makes timesheets essential to any successful business.

Timesheets allow businesses to not only see how many hours their staff are working, but how effective they are at their tasks. A good timesheet solution will provide a simple way to record working hours and a variety of methods to filter data. It may also automate tasks that might otherwise take many working hours to complete.

But staff tracking isn’t the only purpose of timesheets. Companies that charge customers by the hour also need to track the hours they work. They often achieve this by utilizing a timesheet for each client on their books.

History Of Timesheets and Its Relevance for Businesses

Over the years, timesheets have grown beyond their original nature. Starting out as a way for ancient cultures to work out a workers’ pay; they have since developed into an essential business tool that has a variety of different purposes. But to understand how timesheets have become the vital tool they are today; we need to dig into the past and look at the adaptations they have gone through.

The Beginning: A Way to Work Out Pay

The modern timesheet has its roots in ancient cultures. The Code of Hamurabbi, a Babylonian law from 1772 BC, set a typical worker’s daily worker’s wage at 6 grains of silver. That’s about £0.15 per day if we don’t adjust for 3,700 years of inflation. While other trades like tailors and carpenters earned less than this, the Babylonian law was so strict and the punishment for failing to pay so great that a way to record the number of hours worked was essential. Step forward to the first timesheets.

The Industrial Revolution: The Advent of the Time Clock

timesheet management with PapershiftAs business developed and timekeeping technology grew, an hourly equivalent replaced the daily wage. Starting in the early 1880s, a New Yorker named Willard Bundy invented and patented a mechanical time clock. This time clock allowed employees to use simple timecards to ‘punch in’ and ‘punch out’ of work. The machine would stamp the time of entry and exit onto the cards so the employer could see the hours the employee works.

To this day, many manufacturing plants and offices still use timecard systems similar to Bundy’s invention to track their attendance and payroll. This simple system suits their needs and gives them all the data they require. But as the years progressed and technology advanced, the business world’s desire for automation created a push for timesheet evolution. This came with the advent of the computer.

Enter the PC: The Modern Timesheet Is Here

The progress of technology over the past three decades has driven how businesses work by providing tools with far greater functionality than seen before. As a result, many industries have adopted automated forms of time tracking systems. The most progressive companies now use the Internet or cloud-based timesheet applications. These systems offer sophisticated ways of timekeeping, asset tracking, and leave management functions.

This technological drive has pushed mobile devices such as smartphones and tablets into the hands of workers, allowing them to capture time data while on the move. Automating these functions frees employees up to do more important tasks and lessens the need to punch in and out of shifts.

Different Timesheet Solutions

There are a variety of different applications for timesheets in the modern world, including:

Timesheets for Payroll

Timesheets help employers track working hours. They can also keep tabs on leave or holiday allowance, accruals, or any other adjustments for processing payroll. This makes running payroll not only easier and quicker but less error prone and cheaper too.

Task Management

Timesheets are a valuable tool in understanding task management. They can help managers record the start and end times of tasks. This is handy where a business needs to know which endeavors take up more time and identify areas where workflows can be improved.

Timesheets for Law Offices

Law firms generally bill clients by the hour. This makes it important for them to maintain up-to-date records of the hours they work and details of the services they offer clients. From this, accurate billing can be derived and invoices created.

Timesheets for Freelancers

For freelancers, time is money. Most freelancers charge clients by the hour, making accurate time tracking a top priority. For those who work at a different location from their clients, understanding the time spent on a project becomes difficult. Using a time tracking system can allow them to measure working hours and share these records with their clients. This can help them produce accurate invoices and bill clients accordingly.

For freelancers who would fancy a quick online timesheet calculator, check it out here –


Accountant Timesheets

Accountants are another profession that bills by the hour. Timesheets and time tracking software can help accounting businesses track both their bills and the time they work.

Which Type of Timesheet Tracking Is Recommended & Why?

As mentioned previously, there are three main types of timesheet solutions in use by businesses today. These are:

  • Paper-based or manual recording/clocking in/out systems.
  • Spreadsheet software like Excel.
  • Purpose-built time tracking software.

Which one is best for your company depends on what you need from it.

A paper-based or manual register/clocking in/out system has fallen out of fashion in many workplaces. In the modern world, this type of system is only suitable for businesses that require simple logging of hours. Any company that requires data analysis or automation will find this timesheet solution wanting.

Spreadsheets, on the other hand, are still popular for timesheet solutions because of their ease of use and cheap implementation. They also offer a modicum of data-related analysis functions and automation. The major downside to spreadsheets is the need to understand the intricacies of the software and the lack of data analysis tools when compared to purpose-built software.

The most common timesheet solution in modern business is purpose-built software. Purpose-built software accommodates a variety of timesheet tasks. It can also automate many of the tasks an HR department may usually perform. From clocking in/out to logging work hours, to running payroll and performing data analysis, timesheet software can do it all.

What Are the 5 Advantages of Using Timesheets?

The advantage of timesheets will depend on the type of solution implemented. In general, businesses will experience the following advantages:

1. They Can Reduce Time Wastage

Timesheets help an employer understand where they are wasting man-hours. They can help weed out the tasks that take longer than necessary and help make decisions about how tasks can be optimized.

2. Easy Payroll and HR

Timesheet solutions in their basic form provide all the information required to run an array of HR tasks, including payroll. Even the most basic timesheet implementation will allow a business to see the number of hours an employee works so they can calculate their pay. On top of this, things like leave entitlement and other HR tasks can be simplified.

3. Accurate Billing

Timesheets help a business to bill accurately if they charge by the hour. Without a way to record the number of hours worked, sectors like freelancing, accountancy, and the law would find it impossible to bill clients.

A good timesheet solution will also allow clients to know where their money is going and how much work you have completed for them.

4. Automate Billing

Some timesheet software solutions allow organizations who bill by the hour to calculate invoices automatically. This can reduce the cost of billing and reduce the number of working hours to perform the task.

5. Improve Project Management

Timesheets (especially timesheet software) are important tools for project management for many reasons, including:

  • Performance tracking. Want to know who works efficiently in your team? Want to know who to give your next important project to? Then timesheets may provide a solution. The metrics available from modern timesheet software allow managers to analyse the productivity of their employees. This can make it easier for them to see who works well and who needs to step up.
  • Helps manage estimated costs. If you know how well your team is performing, you can often use this to calculate future project costs.
  • Helps manage employee time. Want to know who is working on what and who is available? A quick look at a timesheet should provide the answers.

What Are the Disadvantages of Using Timesheets?

Despite the many benefits of tracking time, timesheet compliance can have negative effects on employees. These include:

Lower employee morale

While many individuals may thrive on being accountable for their own time management, some will feel like they are being spied on. Some, particularly those that value trust in their employer relationship, can suffer from reduced morale and a lack of feeling autonomous.

Timesheet guilt

Timesheets can lead to some team members feeling guilty about reporting their ‘real’ hours if a task takes longer than what is seen as an acceptable amount of time. This can lead to them reporting inaccurate numbers for a task and receiving less pay than they should.

Timesheet fraud

Timesheet fraud is far harder to accomplish in the modern world than it was in the past. Employees cannot generally get other workers to clock them in or out as they used to. But that doesn’t mean that timesheet fraud has gone away and inaccurate reporting of time still leads to wasted money for many businesses.

Difficult to track some tasks

Tasks like meetings, brainstorming sessions, and catch-ups are often billable but can be difficult to track efficiently.

What Are the Legal Requirements of Timesheets?

There are very few legal rules and regulations that dictate the use of timesheets. There is no legal requirement for an employer to implement a timesheet solution in the workplace. They are, however, required to ensure that pay/billing is accurate. Any issues in these areas can lead to legal proceedings taking place.

Often, the use of timesheets in the workplace is governed by an internal business policy. While these policies have little weight in the eyes of the law, employers are required to ensure that they treat all staff fairly.

In Conclusion

Timesheets are incredibly important to most businesses. We hope this guide has helped you understand the topic a little better. For more insightful guides, signup for a free demo.

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Written by Siva

I write & describe the value & benefits delivered by Paperhift's rota planning, staff time tracking, and employee payroll management software. Especially useful for Shift Planners, Rota Managers, Team Admins, and HR Teams :-)