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Time Tracking Explained

4 min read

What is Meant by Time Tracking?

Time tracking is the process of recording the working hours of employees. Organisations use information from time tracking to ensure:

  1. Employees are compensated accurately for the time they have worked, which improves employee engagement and leads to increased productivity.
  2. Senior leaders understand how time (and therefore money) is being spent within the business. This information is used for strategic planning, change management and improving productivity.

When companies talk about time tracking and employee monitoring software, they often also talk about attendance tracking, billable hours, expenses tracking, employee scheduling and approval processes. It is also important to note that freelancers often use time tracking either for themselves or because their clients want to keep track of how many hours are being spent on specific projects.

Traditionally time tracking involved spreadsheets or employees literally ‘clocking in’ with a paper and machine at the start of their shift. Now software and apps, including free versions of time tracking apps, exist to make the process much easier.

Why is Time Tracking Important for Businesses and Employees?

Time tracking is essential for both the overall business and the people it employs because the information gained from time tracking helps both parties in different ways. Time-tracking software especially benefits businesses due to the fact that so much of the information flow is automated.

The Business

Using time tracking software improves profitability, communicaton and helps with setting objectives.

A time-tracking solution benefits businesses in the following ways:

Increases Profitability

Accurate time reports allow companies to track billable hours worked, which ensures they are charging clients the right amount to cover the work involved. In companies that don’t bill clients, time tracking can also help profitability: knowing how much time is spent on individual processes and projects is a good starting point for streamlining workflows.

Helps set SMART Objectives

With detailed reports on how employees spend their time, it is easier to set measurable and achievable goals because line managers know exactly where their employees are in terms of time spent on specific projects. When you understand where someone is currently performing, it is easier to set realistic objectives for them to aim for.

Improves Communication with Clients

Basic time tracking ensures that companies understand what is going on with individual projects, information which they can use to keep clients or other team members up to date with progress without the need to ask individuals for a specific update on their work.

Supports Remote Working

Using time-tracking tools gives companies the confidence that they know their employees are doing their jobs when they should be, which means there is no need for a line manager to sit next to someone to monitor their work. By enabling remote working, companies can create a more inclusive and diverse workforce which has been shown to improve productivity and innovation.


The best time-tracking software benefits employees in the following ways:

Ensures compensation is fair and accurate

Time tracking software ensures that there are no questions about how many hours someone has worked or what they did during those hours. The information from the time tracking app feeds directly into payroll reports, guaranteeing that pay reflects the hours worked.

Provides transparency & improves communication

When the employee or team member and their line manager both have a clear idea of how the employee or team member’s time is being spent, it is easier to have performance management discussions, identify strengths and bottlenecks, and make changes. Tracking time spent on different aspects of the role leads to greater transparency which can, in turn, improve personal employee productivity.

When the employee and their line manager have information about the hours being worked at their fingertips, there is also less time wasted sending reminders or queries, allowing communication to focus on getting the job done to a high standard.

Who is Responsible for Managing Timesheets?

Time tracking software supports remote working

The person responsible for managing timesheets varies between businesses. Line managers and project managers will be involved in signing off individual timesheets, but HR plays an essential role in the overall management of the time-tracking management process.

The Role of HR in Time Tracking

HR professionals can be involved in time tracking in the following ways:

  1. Ensuring the software or system is working properly and being used correctly by employees.
  2. Training individuals on how to use the time tracking tool and also how to use the information available from it in productive discussions about performance.
  3. Troubleshooting any issues with the basic time-tracking features used by employees.
  4. Compiling company-wide reports on how time is being spent.
  5. Regularly monitor the process for time tracking to get feedback and ensure the system fits the company’s objectives.

Time tracking apps can improve time management

How to Improve Time Management & Attendance Tracking

Companies can increase their productivity and profitability by improving employees’ time management and tracking attendance. There are two main ways to do this: change the company culture and put systems in place to better understand how time is spent.

  1. Change Company Culture

A company that sets clear guidelines regarding what is expected of employees, demonstrates that it is committed to supporting individuals to improve their performance and promotes collaboration and teamwork is one where time management is valued and tracking attendance can be considered a necessary and essential part of work. By introducing changes to create this type of culture, a company can improve how its employees manage their time and more easily establish processes to track time and attendance.

  1. Systems to Track Employee’s Time

Time tracking software is a digital programme that enables individual employees to clock on and off shifts and record when their time is spent on specific tasks or projects. The best time tracking software will include time entry and exit management, timesheets and reports, invoicing and billable hours, and even project management and tracking. Once companies have systems in place, they can more easily improve time management and attendance.

Time tracking can improve communicaton and collaboration between employees.

Time Tracking with Factorial

Factorial’s Time Tracking and Attendance tool is available both on a desktop and mobile app. Our user-friendly software includes the following features:

  • Online and automatic time tracking, including comparing scheduled hours v actual hours and project management tracking tools.
  • Annual leave management.
  • Monitoring overtime.
  • Customisation of time and attendance policies for different roles.
  • Integration with existing systems such as Slack and payroll providers.
  • Extra security for the mobile app through QR code and geolocation information.
  • Reporting features include weekly and monthly summaries.

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Imogen is a freelance writer specialising in health, travel and people, who loves creating content that is accessible and easy to digest. She is also currently in her second year of retraining to be a children and adolescent therapist. In her spare time, she goes cold water swimming, plays tennis and loves to travel with her family and their dog.

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