What is Timesheet Automation and Why Does it Matter for Services Organizations?

10 minute read

Team PSA

What Is Timesheet Automation?

Timesheet automation is the key to a profitable services business. Get all the information you need to build an efficient, streamlined process for your organization.

Time and expense automation are the keys to speeding up time to revenue. In a professional services environment, time is a scarce commodity that needs to be managed efficiently and tracked transparently. That’s why this feature is important when it comes to choosing professional services automation (PSA) software.

Timesheet automation is a way of capturing time worked on any device, from any location. You can speed up timesheet completion and management by automating the process of capturing hours worked. Timesheet automation workflows help the right data get to the people who need to see it, ensuring managers have oversight of what’s happening in the team, and finance departments get information for client billing and payroll. Accurate time tracking data means you can quickly adapt resource strategies to better serve your clients and increase project profitability.

But what is timesheet automation all about? This article explains everything you need to know about why timesheet automation is the superpower your service business needs.

Ready? Let’s dive in.


Why Timesheet Automation Matters for Your Services Business

Your PSA software should have timesheet automation. Timesheet automation will make a huge difference to your company. When your employees are scattered at remote locations, working from client sites or from home, the ease of a centralized solution will soon be apparent. Automation keeps timesheets up to date, which in turn means your team can spend their time on the projects and tasks that matter. Managers have access to the information they need to track costs and make adjustments as necessary. Overhead costs go down as payroll processing becomes more efficient.

Lower Administrative Overhead

Businesses that automate timesheets require much less administrative overhead related to timesheet entry and centralization. Pre-scheduled reminders help team members stay on top of their timesheet submissions without the need for a colleague to prompt them. Reconciliation and reporting are significantly more efficient.

Adherence to Corporate Guidelines

Automated digital timesheets can be easily linked to your integrated Knowledge Management system. This means that any time an employee has a question about how they should be completing their timesheet, they have fast access to the information they need to process their time in adherence with your company policies.

Automated Approvals Process

An automated timesheet approval process saves everyone time. Managers have direct insight into how team members are spending their time including the breakdown between billable and non-billable hours. They can use the data to work with their team to ensure the most productive approach to completing projects.

Automated Invoicing Process

Your finance team also benefits: faster timesheet approvals means invoices can go out in a timely fashion. Even better – approved timesheet data including billable hours can be instantly included on customer invoices.


Three Types of Timesheets

We’ve been talking about timesheets, but are you really clear about what is meant by the term? A timesheet is very simply a method used to record and track the amount of an employee’s time spent on a given job.

Timesheets were originally the way of tracking how many hours an employee worked in order to calculate their pay. In some jobs, that’s still the case. Within professional services, timesheets are used instead to record the time spent on a task or project.

The data captured in a timesheet is useful for a few things:

  • Project accounting
  • Estimating future projects
  • Project tracking and management
  • Billing clients
  • Calculating payroll

Payroll Timesheets

These are used simply to track the number of hours an employee has worked. They capture and report data for payroll purposes, for example, leave time, accruals, and any other adjustments needed to process salaries and payments.

Online Timesheets

Many companies still ask employees to complete paper-based or spreadsheet-based time tracking forms. An online system that can interface with your payroll software and accounting software can dramatically help you track and invoice the work that is being done. In today’s landscape, this can mean entry on a web-based system or even via a mobile app where timesheet information can be entered, submitted and approved on a mobile device.

Employee Timesheets

Employee timesheets is another term you might come across but as you would imagine it simply means ‘timesheet for employees’. Typically, employee timesheets are used for non-exempt employees who receive hourly pay to track their hours and ensure fair wages for overtime.


Why Timesheet Policy Is Important

Timesheet policy in an enterprise sets out the procedures, guidelines, and rules for completing, submitting, and reviewing timesheets.

Your policy should be compliant with applicable federal and local laws and include information relevant to all levels of employees within the business, although this might be set out in a different document if appropriate.

Since timesheets form the basis of client invoicing, they are a legal document and need to be treated with the appropriate consideration. Your policy should outline guidance on how you expect employees to manage and complete time tracking, including, for example:

  • Who needs to track their time
  • How and when to report their time
  • How to report and correct errors
  • What to do if you can’t complete timesheets on time e.g. if out of the business with illness
  • The timesheet approval policy
  • The requirement to accurately report time and the consequences of deliberately reporting incorrect information
  • What timesheet data is used for.


Timesheet Policy and Leave Policy

Timesheet policies often include, or refer to, a leave policy, which can also be referred to as time off policy.

A leave policy documents the guidelines for managing and reporting time off from work, taking into account a variety of reasons an employee might not be available for work:

  • Vacation
  • Sickness – short and long term – of the employee or a family member
  • Jury service or appearing in court as a witness
  • Military service or reserve training
  • Maternity, paternity, adoption and other types of parental leave.

The leave policy sets out the guidelines for taking time off and how that time should be reported. It will also cover what leave will be paid and what types of absence would be considered unpaid leave, as well as how paid time off is accrued.

It’s important to align your employee timesheet software with the leave policy so employees can accurately record why they were out of the business on any given day. Timesheet automation will automatically populate the data captured in a timesheet and feed payroll systems, so it’s important that employees have the ability to select the correct reason for their absence.


Three Terms To Know About Timesheet Automation

Timesheet automation is a major step forward for most Professional Services firms. But when you are starting out it can feel like you are learning another language! Let’s dive into the key terminology you’ll come across on this topic.

Per Diem

Per diem refers to additional pay made to employees for daily expenses incurred when traveling for work. A per diem approach means the employees don’t have to spend time preparing detailed expense reports with receipts for low-cost items like laundry or phone calls. Also, the company can budget more effectively because it knows the daily expense rate for employees traveling for work.


Billable means the time or resources can be billed to clients.  This could be the time spent on services delivery by internal employees, or third party consultants such as consultants, accountants, and legal firms.  On the contrary, non-billable time refers to hours that are not charged to the customer, like knowledge transfer within the firm, book-keeping, or file management. Billable hours are the lifeblood of professional services firms, and as such, need careful and accurate tracking.

Non-Exempt Employee

The term ‘non-exempt employees’ refers to members of the team who are paid on an hourly basis. These individuals will receive overtime or time off in lieu of hours worked above and beyond their normal hours.

Non-exempt employees are required to track their time in order to ensure they are fairly compensated for work done.


Benefits of Timesheet Automation

When timesheets are automated, an organization can expect to see multiple benefits ranging from compliance, traceability, clarity and improved productivity.

Remove manual billing
Businesses with multiple disparate systems rely on manual data entry to transfer timesheet information from one system to the next, including invoices. The Aberdeen Group reports that the error rate for mistakes caused by typing in the data can be as high as 15%.

You can reduce the error rate down to 0% by using timesheet automation that populates invoices directly with timesheet data.

Improve timesheet accuracy
When it’s easy for team members to document what they’ve just done, or simply record their daily activities at the end of each day, they have better recall of time spent on specific tasks. At the same time, managers can easily review and approve the information or request clarification.

Improve tracking of billable admin time

Does your team track time spent on emails and meetings? Often this so-called admin time is either forgotten or managed as non-billable time. But depending on your organizational policies this may actually be considered billable and be charged to the client.

Underbilling is a significant source of revenue leakage, so making it easy for employees to regularly record and track their time is a way to improve revenue capture.

Capture service team time spent on pre-sales

Service team members often support pre-sales activity, which results in better proposals and improved customer success rates, so it’s definitely work you should continue. However, how much of your service teams time is spending on pre-sales work?

By tracking this time,  you better see what proportion of their work supports pre-sales, and then make strategic decisions around the impact this has on revenue and profitability.

Achieve clarity around travel billing
We often find that travel time is incorrectly reported due to lack of understanding about company policy. By building rules into your timesheet system, your team can record what they did and where they went, and travel time can then be accurately reported and billed, if appropriate.

Get standardized reporting
An automated time tracking system provides a suite of reports providing governance and oversight so you can see the big picture and then drill into the detail with just a few clicks. Centralized reporting in this way also makes it easier to spot errors and mitigate potential fraud. When everything is online and digital, you can see time entries that were created or deleted by one user on behalf of another, or other pieces of metadata that help you identify unusual transactions.

Demonstrate compliance with labor and government regulations

Data centralization with time-stamped auditing ensures that your timesheets provide the traceability required fo demonstrate compliance with SOX, DCAA, or other regulations.

Timesheet and expense automation are the keys to speeding up time to revenue. Download our complete guide to timesheet automation and learn:

  • What are the three types of timesheets
  • Why you need a timesheet policy
  • The hidden benefits of timesheets
  • Why automation matters

Download the guide

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