One of the first things any business is concerned with when they invest in a new piece of equipment, technology, or a service, is what will their ROI or Return on Investment be? Online time clock software is no exception to this rule and calculating the return you can expect is essential before choosing the software you want to use for your business.
At the end of the day, you want the software you choose to improve your previous system, especially if you were using a manual timekeeping system before. Here we will detail the factors that contribute to timekeeping costs and how to calculate what type of ROI to expect when using an online time clock.
Compare Ongoing Costs versus One-Time Costs
When using a manual job clock, many of the costs incurred are recurring costs that you pay again and again. These include the cost of paper and supplies and extra wages for personnel to spend time on timekeeping. There is also the ongoing cost of data entry, error management, and handling costs.
By comparison, online time clock software only has one real ongoing cost: a monthly or annual subscription. This means that beyond the subscription price, the ongoing costs for the software are minimal.
Calculating the ROI based on ongoing costs alone is complicated, but you can expect at least some immediate return due to the lower continual price after implementation.
Measure Productivity Across the Business
Productivity in the workplace is a bit easier to measure. The amount of time lost spent processing time and payroll manually directly correlates to the amount of actual business that gets done. Manual data entry is not only costly, but it is also time-consuming and takes away resources that are better spent elsewhere.
With online time clock software, the process is automated. Automation saves money on timekeeping, payroll processing, and error management and speeds up the entire process. Of course, the actual increase in productivity will depend on the size of your business, but you can expect it to be several times more than the cost of the software itself.
Productivity can be tied directly to increased profits. Therefore, increased profits are one factor that determines ROI, besides the base cost and ongoing costs.
Measure the Payback Period
When we refer to the payback period, we refer directly to the amount of time it takes to pay back the initial investment spent. In this case, we are talking about how long it would take to pay off the initial cost of implementing an online timecard system into your business.
This can vary slightly based on company size and implementation needs, but the average payback period is about one month for modern online time clock software. This means that we can assume that with the number of ongoing expenses involved in using time clock software, the ROI will be several times the initial cost within a year. You can expect that figure to grow once the initial investment is paid off and systems are standardized.
Even accounting for outlying factors such as employee turnover, system upgrades, updates, and purchasing new equipment as existing systems age, the expected ROI is several times the annual cost of using timesheet management software.
Based on all the available data, if we assume the one time costs of implementing online timesheet software are fixed, and the ongoing costs are minimal, then at the average rate of just over one month of payback period, we can assume an average ROI of 10x the amount spent within the first year.
While implementing online time clock software may seem costly and cumbersome, the process is very straightforward and can lead to a robust ROI. Not only will you benefit financially, but in terms of employee productivity and morale.