In a 2017 survey we conducted, small businesses said that using the right technology was one of their top business challenges.1
But, when it comes to managing expenses and tracking employee time, using manual methods creates an even bigger set of challenges. Without the right tool, small businesses will constantly have to deal with errors in their calculations.
If you’re a small business owner or an IT professional looking for an expense and time tracking system, you need to shortlist those that offer the right features to address your unique business needs.
To do that, you must first differentiate between must-have features and those that are notable but optional for many buyers. Once you assess your needs, thoroughly review each vendor’s offering, so that you don’t pay for features you won’t use.
Failure to differentiate between the must-have and optional features—and not understanding which features to adopt at which stage of your business—could result in unnecessary expenses. If you deploy the wrong software, you’ll see a negative return on your tech investment.
In this article, we’ll provide small businesses a breakdown of the features of expense and time tracking software. We explore the technical aspects of the top and other notable features, along with the benefits and a few key facts that will help small businesses make the right choice.
Top and notable features of expense and time tracking solutions
Top features: The ‘must-have’ expense and time tracking features
Project time tracking aids effective resource planning
The project time tracking feature monitors an employee’s productive work time. It provides detailed information about an employee’s availability and daily utilization in a project.
- Lack of clearly defined milestones and objectives to measure progress result in 37 percent of project failures.
- Organizations with 60 percent or fewer projects finishing on time, under budget and that achieve the original goal have lower benefits realization maturity.
Key technical aspects of project time tracking
- Project management: Time tracking software comes with basic project management features. Project managers can group tasks and set project deadliness for team members for each day, week, and month.
- Project forecasting: This feature provides visual summaries of project and employee performance. You can get an accurate estimate of the time required to complete a particular task or project based on previous time and project trends. Use these estimates to benchmark employee time for any project to uphold project performance.
- Real-time project data: This feature allows you to export project data in CSV format and integrate it with Microsoft Excel and third-party accounting applications. It also lets you share real-time updates to your organization.
Key benefits of project time tracking
- Improves decision-making: Budget and time alerts help small businesses be more agile and make resource adjustments mid-project to avoid getting outside the scope when it comes to time and budget. The timely project performance reports help project managers gauge the need for training and for improving business processes.
- Helps make accurate estimations: Time reports and historical performance reports from past projects help small businesses set estimates for future projects. They can convey expectations to stakeholders and back their resource management decisions with accurate data.
- Boosts collaboration and accountability: Assigning tasks to team members makes them feel accountable for the overall project timeliness. This creates a sense of collaboration and inspires employees to actively contribute to the company’s growth.
Timesheets prevent time theft
Timesheets provide a time log for each employee with details about the specific task and project they worked on and when. This feature also notifies employees when someone finishes a task.
- Sixteen percent of employees who submit timesheets at work admit to “buddy punching” (i.e., they clock time for their co-workers).
- Timesheet errors amount to an additional 15 to 60 minutes per employee.
- Sixty-two percent of small businesses with hourly employees are still tracking time using paper timesheets or Excel sheets.
- Four in five small businesses with hourly employees say they can’t fully rely on their time tracking system, which is a big waste of time and money in each pay period.
Key technical aspects of timesheets
- Time tracking and work management: This feature helps you track time during the job or after your work is done. You can add notes about the work you did for each client on a project as well as each specific task.
- Timesheet review: You can review your daily timesheets every week and record time for multiple days in one go. It lets you color code the incomplete and complete entries for easy recognition and reference.
- Timesheet management: Project managers can specify the minimum hours required to complete a timesheet. The benchmarking can differ for each employee as per your business requirements. This feature helps you manage all your contractual workers.
- Automated reminders: Set automated alerts to be notified about incomplete timesheets, which your accounting team should know about. Include reminder messages that you can customize to your needs.
Key benefits of timesheets
- Tracks time of remote workers and freelancers: Small businesses might hire remote workers and freelancers to save infrastructural costs. Timesheets help them manage the attendance and time of remote workers and freelancers. Features, such as automated screen capture, also allow time monitoring to ensure that the small businesses do not lose time or revenue.
- Ensures efficient payroll management: Timesheets capture the total hours worked and leave taken, which allows for accurate time recording. This makes it easy to calculate payroll, as it’s convenient to incorporate factors such as wage differences and employee incentives over time.
Expense tracking manages business budgets
The expense tracking feature helps managers track all project-related costs, including the cost of resources, labor, equipment, and expenses.
- Fifty percent of employees lose paper receipts—the top pain point in expense management.
- Eighty-seven percent of small businesses achieved full ROI within a year of deploying an expense management solution.
- Fifty-three percent of companies said they saw a decrease in processing costs (lower paper, postage, and storage costs)
Key technical aspects of expense tracking
- Expense management: Expense tracking tools help you set expense limits for each project. You can send email notifications if an employee exceeds the budget. Also, managers can record future expense entries to handle expenses better.
- Expense approvals: Expense tracking software automates and streamlines the workflow with expense approval functionality and control step. Managers can optimize approval chainsas per your organization’s policies. They can set review and approval dates to avoid any unpaid expenses or dues.
- Bulk expense management: Import your Excel files into the software with this feature. The approval process for bulk expenses is also via the customized approval chain, which has designated approvers and compliance monitors.
- Policy compliance: Expense management software validates each expense item and detects fraud. It flags expense overruns, duplicate expenses, and missing documentation or receipts.
Key benefits of expense tracking
- Increases accountability: Define roles for the expense approver and expense maker to increase accountability, and thus, streamline the process of expense management.
- Speeds up reimbursements: Preparing expense reports manually may not always get completed or approved in time. But the software lets you send automated alerts and notifications to ensure that your reports are completed on time and approved quickly.
- Automates various functions: As your small business grows, you should automate expense management. Start with automating repetitive tasks, such as expense approvals and validation, to speed up the execution of operations and functions pertaining to expense management.
Job costing boosts agility and overall expenses
Job costing helps businesses identify the labor costs incurred during projects and on various jobs. It tracks all the costs, from the estimated costs to any extra costs added in the bidding process. This helps manage expenses and maintain a record of each and every expense on individual items.
This feature provides detailed tracking as well as reporting and billing capabilities that can create accurate invoices to ensure timely payments.
- Labor costs (such as employee wages, benefits, and payroll) account for 70 percent of total business costs. However, HR professionals spend just 15 percent of their time managing this vital aspect of any business.
- Thirty-nine percent of the surveyed companies say that switching to an automated expense reporting system has improved their invoicing and payments processes.
Key technical aspects of job costing
- Rate assignment: This feature lets you assign pay rates based on a job, user, or market rate. The dashboard allows managers to manage the pay and job settings.
- Billing and invoicing: Expense and time tracking software offers detailed billing functionalities to track, manage, and report billing. The tool records the billable hours of individuals and projects to automatically generate bills and invoices. It then sends alerts and notifications to ensure timely payments of the invoices.
Key benefits of job costing
- Improves agility with cost analysis: Job costing helps managers see the expense split in a project. They can also see the incurred direct costs, labor costs, and overhead charges so that they can better handle the overruns.
- Facilitates accurate cost estimation: Managers can anticipate the feasibility of any job based on cost analysis and take up projects depending on the anticipated project profitability.
- Offers work quality evaluation: The job costing feature gathers information about the amount of work done in a given time. It does statistical evaluation of employee performance, which can be used in performance benchmarking and to identify any improvement measures, in case of any lags.
Notable features: Optional features to be considered against specific business needs
Reporting and analytics tools boost data-backed decisions
The reporting and analytics feature in expense and time tracking tools tracks and analyzes all the relevant data in a particular project. Insights from this data helps managers effectively forecast and manage risks.
- Seventy percent of small businesses use manual processes for expense and time reporting.
- Simplifying the expense reporting process is a determining factor for 38 percent of companies in adopting a cloud-based expense management system.
- Cloud-based expense management systems reduce the time spent on creating and approving expense reports by 42 percent.
Key technical aspects of reporting/analytics
- Reimbursement and expense reports: These reports provide information about expenses incurred, approved, and denied. View details of the person responsible for reimbursement—whether it’s the business or the client. Expenses incurred by clients are automatically added to the invoices sent to them.
- Job costing reports: This feature helps managers understand the business’s cash flow. Identify any loopholes so that you’re able to maintain the overall financial health of your business.
- Project time tracking reports: This feature lets you gather data and insights about the state of a project at any given time. You can customize real-time project data and then make them into reports to evaluate project performance.
Key benefits of reporting/analytics
- Enhances project and performance management: Detailed reports on the time spent on a project offer insights on the top-performing projects and employees. It helps managers identify employees who need coaching; they can also make timely, data-backed decisions for better, overall project management.
- Fosters data transparency and centralization: Expense and time reports can be shared across departments and organizations. Stakeholders can access up-to-date data, which lets them make quick, data-driven business decisions.
- Increases accuracy of project forecasts: With these reports, small businesses can accurately predict the time and cost for a particular project. They can foresee challenges and undertake projects based on the estimated profitability.
Next steps and additional resources
Identifying the core and optional features in an expense and time tracking tool is essential to avoiding a negative ROI from a software deployment.
Here are some steps to help you shortlist a tool based on the features you need:
Browse the following GetApp resources to help your small business evaluate and compare how these features work in different expense and time tracking solutions:
1We conducted this survey in April-May 2017 among 699 US-based SMBs, with more than 10 employees and annual revenue of less than $100 million. The survey excluded not-for-profit organizations. The qualified respondents are decision makers, or have significant influence on the decisions related to purchasing technologies for their organization.