Do you have staff who work irregular hours? Should you implement a timesheets procedure to track their hours for staff payroll? This article will take you through 3 different options to keep track of staff hours.

Timesheets are a means of gathering and verifying this information  – they are especially useful when an organisation has multiple staff members with varying hours and pay rates, such as project-based activities.

An effective timesheet will gather (at least) the following information for each employee:

  • The dates worked
  • The hours worked (less any breaks)
  • Any additions, such as overtime
  • A method of confirmation/approval

A process for completing timesheets for each payroll cycle will need to be agreed, and owners agreed for each step of the process.

  1. Who will provide the data? (e.g. The employee themselves?)
  2. Who will verify/approve the data? (e.g. Their manager?)
  3. Who will process the data? (e.g. The bookkeeper?)

Timesheet processes may involve several parties and we should ensure a workflow is in place to carry the information forward through each stage of the process.

Finally, we need to decide on a process for capturing timesheet data. Here are the three we use with our clients.

The humble spreadsheet

Often the most simple method proves the most effective. Spreadsheets can be customised to gather the information we require, in a format which is relatively familiar for most users. Once a template has been setup in your spreadsheet software, the information can be updated as and when it is needed.

An example of how this may be formatted is shown below:

Day Date Start Finish Break Hours
Monday 09/10/20XX 09:00 17:30 00:30 8.00
Tuesday 10/10/20XX 12:00 16:00 00:00 4.00
Wednesday 11/10/20XX 09:00 17:30 01:00 7.50
Thursday 12/10/20XX 09:00 17:30 00:30 8.00
Friday 13/10/20XX 09:00 17:30 00:30 8.00
Saturday 14/10/20XX
Sunday 15/10/20XX
35.50

 

The advantages of spreadsheets are that:

  • They’re low cost
  • Most people are familiar with them
  • They are flexible and can be edited as required
  • Controls can be put into place – providing you know how to implement them

However, there are a few limitations with using spreadsheets for this process:

  • Version control; files should be maintained to ensure we are always working from the most up-to-date documents. Spreadsheet Timesheets can be edited or deleted after being submitted for payment which risks losing historic data.
  • Human error; although formulas can be used and cells can be protected, a simple mistype can disrupt an inbuilt formula. For example, if someone was to enter in a “Space” before or after any of their figures or entered a O instead of a 0.
  • Manual entry; much of a spreadsheet’s data needs to be keyed in manually and in many cases even the “Dates” themselves would need to be updated. Not a problem, unless of course someone forgets to update the crucial figures!

Xero

We use Xero for the majority of our client accounts, and as it happens, Xero also offers payroll services where timesheet functionality is readily available.

As you would expect with a cloud payroll solution – a timesheet can be completed from the convenience of an employee’s phone! This means an employee can complete their hours anytime, anywhere and most importantly; while they remember!

Simply select the timesheet option, select the data and key in the hours: beautiful!
Timesheets for staff payrollTimesheets for staff payrollTimesheets for staff payrollTimesheets for staff payroll

As for the final processing, this can be confirmed from Xero payroll by a user with higher access rights. Meaning that each timesheet will go through multiple stages: from Draft to Submitted, all the way up to Declining/Approving and even Paying.

Timesheets for staff payroll

The advantages of inbuilt systems are that:

  • The cost may already be included in your subscription/license
  • All payroll functions are maintained in one system
  • Full audit trail of activity
  • Controls are often inbuilt to generate the workflow while preventing errors

However, there are a few limitations with using inbuilt systems:

  • They are less flexible than spreadsheets; Xero timesheets may be less flexible than the spreadsheet you are currently using. This can sometimes be an advantage as it prevents over-engineering a process!
  • Human resistance; systems are great providing everyone is willing to use them as intended. Users who aren’t familiar with the system may attempt to use “workarounds” or may even work outside the system. This should be discouraged wherever possible.
  • Firefighting; it can be useful to have a “superuser” who is familiar with the system and can resolve issues when they occur. Although, more often than not, most systems will have a dedicated support centre to resolve such issues.

MyPAYE

Before we switched most of our clients to Xero – we used MyPAYE which is a fabulous third-party cloud-based payroll with timesheet functionality. The biggest disadvantage of MyPAYE over Xero is the additional £1 per employee cost of MyPAYE timesheets.

The timesheet functionality in MyPAYE is not as user-friendly as Xero, however, because it is a specialist payroll software, it does offer additional functionality for controls, project tracking and reporting. MyPAYE allows you to record hours by projects and allows isolating overtime hours from ordinary hours.

Timesheets for staff payroll

The advantages of specialist payroll or timesheet systems are that:

  • They are often specialists in the field and may offer additional functionality
  • They often keep audit trails of activity
  • Controls are often inbuilt to generate the payroll workflow while preventing errors

However, there are a few limitations with using inbuilt systems:

  • Cost; specialist payroll solutions are generally more expensive than spreadsheets
  • They are less flexible than spreadsheets; although this depends on the software provider themselves. Then again, this can sometimes be an advantage as it prevents over-engineering a process.
  • Human resistance; systems are great providing everyone is willing to use them as intended. Users who aren’t familiar with the system may attempt to use “workarounds” or may even work outside the system. This should be discouraged wherever possible. The simplest discouragement is only to pay staff on submission of a time sheet.
  • Firefighting; it can be useful to have a “superuser” who is familiar with the system and can resolve issues when they occur. Most systems will have a dedicated support centre to help resolve such issues.

To summarise

Each business is unique and will look for a solution that best fits their own business needs. Although spreadsheets offer a good short-term solution we generally find that better quality, better-controlled solutions suitable for the long term are provided by using specialist software systems.

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