|5. Inefficiency and Wasted Time|
|How much time does it take a bookkeeper to manually add up timecards and calculate pay, taxes, and benefits? How much time is spent investigating and making corrections, answering employee questions about alleged discrepancies and manually cutting checks to compensate for underpayment? |
Most businesses, payroll is a half-automated procedure at best. Employee time collection, a routine process of collection, editing and payroll data entry is still almost fully manual. Manual timekeeping is an expensive, time-consuming and often requiring weekly or bi-weekly process. A typical manual payroll process requires at least ten different steps including:
• Preparation, distribution and collection of timecards or manual sheets.
• Clerical computation of hours worked by employee, by department.
• Clerical computation and verification of hours/days by employee.
• Clerical breakdown and calculation of total hours by employee into regular, overtime, differentials, premium time, etc.
• Keypunching of regular, overtime and other hours by employee.
• Manual entry of corrections.
• Clerical balancing of edit report totals to control totals.
• Editing of computer reports.
• Computer processing of the final payroll.
According to American Payroll Association, it takes an average of five minutes to manually compute the hours worked for one employee for a biweekly pay period. Other observations show that the manual totaling of timecards takes approximately seven minutes per card, including department head time for auditing. The following table summarizes the cost of merely calculating timecards, assuming one bookkeeper, paid $15 an hour, spends five minutes per timecard, 26 times a year:
Number of Employees
| 50||100 ||250 ||500 ||1000 |
| Bookkeeping hours per year|| 108||216||540 || 1080|| 2560|
| Annual cost $15/hour || $1620 || $3240 || $8100 || $16,200 || $32,400|
Of course, manual calculation is just one of the ways that timecards waste time. Payroll staff is required to spend time investigating timecard errors, making corrections and answering to employee questions about alleged underpayment or other discrepancies. Timecards also have to be distributed and collected.