Tracking Time: Why it is so Essential to Your Profitability

By Mark Engelberg, TimeLinx


Time tracking. Just the thought of it can get employees riled up. Thoughts of micro-managing and privacy intrusion immediately spring to mind. However, time tracking is invaluable for both employers and employees, and the benefits should not be ignored. Time tracking may not be something that every company does, but it most certainly should.

On paper, time tracking simply comes across as employees spending valuable working time justifying how they have spent their valuable working time. However, when done effectively, it gives all stakeholders productivity metrics as to how and where time is being spent. It’s not about spying on social media use. It’s about gaining insights into capacity – where too much time is spent and where a business should streamline or automate a process. It also gives employees insight into their time management and forecast work capacity. After all, how can one commit to a timeline if they don’t know what their current schedule looks like and how long a task will take? Without adequate and accurate time tracking, how a business spends its time and project when it expects to deliver on client expectations will come down to guesswork, particularly in the services industry. For companies serious about competitive service delivery, a software solution that makes time tracking easy for staff cannot be overlooked.

Job Cost and Revenue Maximization

Time is money. Every segment of time spent in certain businesses translates into revenue to invoice to clients. An overlooked part of a service business measures how much time is spent on non-billable work by billable employees and how much time is spent on customer work that does not get recorded, and therefore not invoiced. These numbers are more extensive than most companies realize. When it’s wasted time by a non-billable employee, that is an unnecessary cost. When the loss is by a billable employee either spending time on unproductive pursuits (email, social media (!), etc.) or not capturing work for a customer, then it’s a double loss for the cost AND the revenue. In a not-for-profit business, revenues for time don’t generally apply.

However, the other side of the coin is that time tracking produces the numbers used for job costing, which is critical for any project or services organization. How much did it cost us to deliver this service? How much is employee “x” costing the organization to provide a project? What is that cost compared to another employee who is either at a different salary or hourly cost or spends an additional amount of time? These are critical numbers for any CFO, Controller, or business owner to understand so they can do the job they need to do.

So, what is time tracking exactly?

While somewhat obvious, time tracking is the task of employees recording the hours of their day and how and where those hours were spent. And it should not just be reserved for lower-level employees. Management at some finance level in the company needs to know where the time goes. Time tracking should include billable and administrative hours and be as granular as possible. This granularity enables employees to identify where their working hours are going, which clients or tasks are taking up most of their time, and whether that time usage is valuable for the overall business. It also gives them the power to plan their time accurately, give accurate timelines, and effectively manage expectations internally and externally. Knowing that a task will take 2 hours and that there is only a sufficient gap in 2 days allows employees to avoid over-promising and under-delivering. It also improves a business’s understanding of capacity and can forecast recruitment activities when it is time to grow.

Improving your financial game

The benefits of time tracking are numerous, with a direct impact on your bottom line. Keeping track of where valuable working time goes is an essential part of managing a business’s finances. How can you identify a client costing you more than they’re paying if you’re not keeping track of all the resources that are being delivered? Automated timesheets allow a business to pinpoint how much time was spent on individual tasks, by which employees, and, overall, how long a project took to deliver. Automated timesheets make this relatively simple, especially if the time tracking system is integrated with your project or service platforms. Then combine automated rate and cost calculations with definable pricing rules to put your business on a winning path to profitability.

How does one implement time tracking?

There are numerous ways to track time. Using a software solution is the most productive solution, but don’t just turn to a quick fix. Not all software will give you the ability to achieve what has been outlined above. Standalone time tracking software will most likely just be a hindrance to your employees. Using a PSM solution that integrates with your CRM and connects to your ERP will tie all the data together, from time tracking to project management to accounting. Not only is this the most hassle-free solution, but it also provides the overarching “big picture” view that businesses need to gain a competitive edge.


When implementing a time tracking tool, determine whether it will help or hinder your employees. Using the correct time tracking tool will drastically improve your company’s time management, productivity, and efficiency, all of which directly impact your business performance and bottom line. Maintain a holistic view of your employees and your projects while simultaneously keeping an eye on capacity and finances. Don’t let tracking time take time. Do use a fully integrated software solution.

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About TimeLinx
TimeLinx delivers innovative project & service management software as a complete solution that perfects the sell-track-manage-support-bill cycle that services organizations must have to delight their customers; TimeLinx brings the cycle together in a single application that offers less frustration, better project management, complete reporting, and improved profitability – all specially designed for Infor and Sage.