Return on Investment

Your return on investment (ROI) in a Time and Attendance system is generated from three areas:

savings from reducing processing time,
eliminating calculation errors, and
reducing time theft.

You will find that your largest savings come from hidden costs that you may not have considered. To be conservative this ROI is based upon saving approximately 1.5% of your gross payroll. The American Payroll Association (APA) estimates that most companies will save closer to 5% of gross payroll costs. To aid in your calculations, this worksheet has an example that demonstrates how a company with 10 employees, averaging just $8.00 per hour, can save at least $2390 annually! If math is not your thing, use this example to estimate your savings.

For those calculating their own ROI, we examine each portion of savings separately. The APA has provided the referenced figures.

Print out this page.
Warm up your calculator.
Enter your company's figures.
Calculate your potential savings.

Savings from Eliminating Manual Computation

The APA estimates it takes 2.5 minutes to manually compute one time card.

Step	Description	Example	Your Company
A.	Number of pay periods per year	26	____________
B.	Number of employees	x 10	____________
C.	Total hours saved A x B x 2.5 / 60	= 10.83 hours	____________
D.	Hourly wage of your payroll staff	x $12.00	____________
	Total savings from Eliminating Manual Computation C x D	= $130.	I. ____________

Savings from Eliminating Calculation Errors

Calculation errors occur when manually adding employee hours. The APA estimates that manual payroll has an error rate of at least 1%. Calculation errors are eliminated with a calculating time recorder. To simplify this example we assume a 40-hour workweek.

Step	Description	Example	Your Company
A.	Average wage of your employees	$8.00	____________
B.	Number of employees	x 10	____________
C.	Total hours worked per year (40 hours per week) x (50 weeks)	x 2000 hours	____________
D.	Total gross payroll A x B x C	= $160,000.	____________
E.	Percentage of error	x 0.01	____________
	Total savings from Eliminating Calculation Errors D x E	= $1,600.	II. ____________

Savings from Reducing Time Theft

Coming in late, leaving early, or simply beating the clock, or riding long breaks all add up to extra payroll expense. A calculating time recorder will allow you to define a flexible set of workplace rules to prevent and flag any of the above events. The APA estimates as much as 5 minutes per day are lost due to these factors. Some businesses are better about controlling this than others. If you run one of the tightest ships around, a good time and attendance system can still eliminate at least 2 minutes per day. Once again, to simplify this example we assume a 5-day week, 50 weeks per year. With two minutes saved per employee per day this equals 8.33 hours per year!

Step	Description	Example	Your Company
A.	Time saved per year	8.33 hours	____________
B.	Average wage of your employees	x $8.00	____________
C.	Number of employees	x 10	____________
	Total savings from Reducing Time Theft A x B x C	= $660.	III. ____________

Total Your Savings

Step	Savings	Example	Your Company
I.	Eliminating Manual Computation	$130.	____________
II.	Eliminating Calculation Errors	$1,600.	____________
III.	Reducing Time Theft	$660.	____________
	Total savings I + II + III	= $2,390.	____________

This example demonstrates how even a small business can loose thousands of dollars annually. Your largest savings from a good time and attendance system comes from getting rid of hidden costs that you may not have considered. In this case, if a small company with only 10 employees was only targeting the labor savings in step I, they would most likely elect not to purchase. That decision could cost $2,390 annually in hidden costs!

We can provide you with quick, simple, and reliable solutions to automate your company’s time and attendance, such as:

a stand-alone time clock that prints directly to a printer (without a computer);
a Windows-based time-and-attendance system; or
the convenience of desktop sign-in for your employees.

You may be able to recover your investment in less than 6 months!

Thank you ...
This information was adapted from a document provided by Icon Time Systems.