Measuring Labor Cost and How it Relates to Increased Productivity

People provide their labor to businesses in exchange for wages, and they trade their unpaid leisure time for paid work time to make a living and to be able to purchase goods and services. Businesses, in turn, use this labor to produce goods and services demanded by consumers.

Economists divide the factors of production into four categories: land, labor, capital, and entrepreneurship.

The second factor of production is labor. Labor is the effort that people contribute to the production of goods and services. Your people are the most important assets in your business. They are also the assets that change most often and require the greatest amount of nurturing and development in order to deliver expected results. Effective workforce optimization depends on the right blend of training, performance standards, technology and motivation.

Labor Types

Types of Labor

Unskilled and Semi-skilled Labor - Unskilled laborers may lack basic skills necessary for satisfactory workplace performance. This means someone in your organization must train them, supervise them closely or provide extensive on-the-job training to ensure work is performed as specified.

Salary & Hourly (Wage Employees) - Salaried and hourly wage labor are those employees whose compensation is in exchange for work done. Do you have an accurate picture of which projects or clients are getting the lion’s share of your employees’ hours? Not likely, unless you’re tracking in real time to see where you’re getting bogged down, where you’re getting the most bang for your buck, and where you might need to allocate more resources.

Contract Labor - Independent contractors, on-demand or self-employed workers, and freelancers are individuals who do work for you but are not your official employees. If you rely on a contractors to get the job done, sometimes you do need to know when they are working and track how many hours they’ve put in. There are several reasons you might want to track how long, when, or even where your virtual team is working:

If you pay them by the hour, tracking contractor hours ensures you aren’t overpaying.
If you have contractors who bill by the hour, they need to know their billable hours to invoice accurately.
Knowing how contractors worked on a project helps you better estimate job costs so you can bid more accurately for similar jobs in the future.

Defining Productivity

Productivity is the amount of goods and services that the labor force creates. It's measured by how much is produced by a certain amount of labor and a fixed amount of capital. The more they create, the higher their productivity. Companies seek ways to boost productivity because it increases their profit. High productivity creates a competitive advantage.

Productivity

Eliminating Calculation Errors increases productivity

When you process accurate time cards, you are better able to forecast your labor costs and plan your job cost more effectively. Keeping Excel spreadsheets or pen-and-paper time sheets is definitely no longer the best way to manage your staff. With an intuitive cloud-based time tracking tool (like ours) you are able to manage employee and contractor job cost and absenteeism on-the-go when needed, and create and process error-free payroll every time.

Understanding Data & Analytics increases productivity

Business analysis is an important part of running any company. Taking a look at your business resources and keeping good records of your employee time not only allows you manage project and job cost, it also allows you to forecast your labor costs better for future work.

Being able to pull up your labor data and analyze it to forecast real-time labor costs gives you a great starting point for planning and optimizing your budget.

Improving punctuality makes a difference, and having a way to monitor employee attendance habits keeps your team honest. It also provides a great way to perform employee reviews and audits. Having clear attendance data at your disposal allows you to plan better as well.

Bottom Line

Productivity doesn’t just increase your efficiency. If you do it right, it can also increase your income. True productivity isn’t about getting more things done. It’s about getting the right things done. More income for you means more charity for others, new jobs for others, and new products and services for others.

Let Hour Timesheet help your origination track your labor-force and your productivity today

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DCAA Compliance: QuickBooks

Both QuickBooks Desktop and QuickBooks Online can be set up properly to be DCAA / FAR Compliant. The keys are Job Costing and Labor Distribution. The advantage that QuickBooks Desktop has over QuickBooks Online is it's integrated payroll module that permits direct charging of time direct to the General Ledger including Customer, Job, and Service Items.

QuickBooks Desktop

This interface of web-based time tracking software and payroll makes QuickBooks Desktop the superior tool for DCAA Compliance based on our experience with hundreds of clients over the course of several decades.

QuickBooks Online

While QuickBooks Online is not designed to meet the FAR and DCAA requirements, and it has some limitations on meeting all the requirements, there are ways to make a QuickBooks Online system meet all the government's requirements.

Keys to Compliance

Timesheet Kay Features

Employee time tracking posted daily with required explanations for edits and record locking
Printable timesheet reports
Policies & Procedures oriented toward FAR Compliance Criteria found in DCAA's SF-1408 pre-award audit checklist
Consistently applied labor dollar distribution accommodating uncompensated OT for salary exempt personnel
Indirect Cost Pools and the ability to compute and forecast Indirect Rates applied to Direct Costs under Cost Reimbursable Awards
Progress billing + Cumulative dollar values reported against award ceilings tied to cost proposals
Identification and segregation of Unallowable Costs as defined per FAR 31.205

We can Help

Hour Timesheet isn't just a timekeeping software provider for government contracts looking to pass a DCAA audit. We also partner with dozens of CPA firms and consultants who can assist you with the entire life cycle of getting a DCAA approved accounting system. Give us a call today and we can introduce you to our long list of partners.

Call 832.942.9556 today!

QuickBooks Timesheet & DCAA Compliance

Looking for specific QuickBooks timesheet features & DCAA compliance?

What type of firm needs time tracking software?

Most employers who hire hourly employees need to know the number of hours each employee has worked so that payroll can be calculated properly. Government contractors have have a different set of rules and are required to track time, both hours for exempt and non-exempt employees. Even organizations who only hire salaried employees have a need to track projects or tasks for successful project management. That's why finding the right time and attendance software is critical to your bottom line.

features are key

What to look for when evaluating timekeeping software.

When researching tools, make sure the software that you are evaluating includes the following:

daily reminders
job tracking
online approvals
detailed audit trail
correction time sheet workflow
mobile access (iOS and Google Play)
web clock
integration with your accounting system (QuickBooks Online & QuickBooks Desktop)
knowledge of government contracting and how federal governments contract audit agency dcaa regulations

Work smarter…. not harder.

Are you wasting time and money on the following?

Correcting math errors on hours worked and other time activities
Tracking down late or missing weekly timesheets
Manually entering employee time worked into your accounting and/or payroll file?

If you answered yes to any of the questions above, It's time to let today's technology work for you. Intuit and QuickBooks have a marketplace where 3rd party vendors who offer time tracking are listed. Only companies that pass strict guidelines and follow Intuit's partner policies are listed on these sites.

View QuickBooks Online Marketplace Apps here

View QuickBooks Desktop Marketplace Apps here

Hour Timesheet was created for you; with your origination in mind. We have created a simplified solution that captures your complex situations. Give us a try FREE for 30 days. No credit card required. Our experts with over 20 years of industry experience are waiting to hear from you now. Hour Timesheet includes a QuickBooks timesheet import sync that makes your payroll process a snap!

Hour Timesheet can be a perfect tool that will integrate & sync with your QuickBooks Desktop Hosting keeping an eye on your reminders, daily tasks etc. Learn more about add-ons like Office 365 E3 suite for improving your team collaboration.

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Incorporating Analytics in Timekeeping Software

Incorporating Analytics in Timekeeping

Timekeeping software is an essential part of running an effective and profitable business. The days of employees manually inputting data on time sheets or using paper time cards to log work hours are long gone. Enter digital timekeeping software, which HRMS calls the updated and streamlined version of old-school timekeeping methods. With each employee clocking or swiping into the system automatically each day, today’s timekeeping software is able to collect massive amounts of time and attendance-related employee data in real-time. This is where data analytics enters the picture.

Through the combination of digital time tracking software data and analytics software, any company can plan the deployment of its workforce, administer leave and scheduled time off while managing performance, and calculating payroll more accurately. While the data for all of this has always been there, the help of artificial intelligence (AI)-enabled data analytics tools, companies can work towards these tasks much more efficiently and thus, increase over-all profits.

Modern employee time keeping devices are powered by two of the fastest-growing technologies: artificial intelligence (AI) and data analytics. These two innovations have already made massive changes in the way several industries operate. In an extensive post by Maryville University on the outlook for data analytics graduates, they note that the top industries to take advantage of analytics by 2020 will be banking, manufacturing, federal/central government, and professional services. Not only that, since more than 5% of Americans are already working from home, you can already say AI- and data analytics-backed businesses are the future.

There’s no denying that digital timekeeping is the next logical step when it comes to fostering business growth no matter the size of the industry. Here at Hour Timesheet we understand how critical it is for employers to gain insights into how much time their employees spend on everyday tasks including breaking down billable hours and accounting for time by projects and tasks. This data lets them see the typical day of an employee, which can help streamline a company's workflow and create more achievable goals while immediately adding real-time analysis to assist with the ability to manage projects and estimate projects .

Good timekeeping software with an intuitive interface also allows managers to take care of employees’ interests allowing employees to track time daily, weekly or hourly online and in real-time. Popular software platforms like Intuit's QuickBooks desktop and online solutions like Hour Timesheet combine timekeeping with accounting software providing timesheet data to automatically sync between the two systems. Not only is it a more affordable way to manage a company’s invoicing and payroll, but it’s also a great way to keep track of an employee’s leave balance history. We recognize the importance of a timekeeping software like Hour Timesheet that can also track leave and work hours online and on a mobile time clock app. This is because it’s more accurate than the typical Excel spreadsheet. A cloud-hosted service time management provider such as Hour Timesheet allows workers to do their jobs remotely, without employers having to worry about tracking their work time, keeping tabs on leave and absence time, and making sure they’re working as efficiently as they would if they were in an office. Any dip in performance can be correlated to the data obtained from the employee timesheets.

Timekeeping software is a powerful tool that companies must use to improve their overall efficiency. It gives employees more control over the time they spend at work, and allows employers to accurately track how much time is spent on different projects. This allows the company to create a positive culture with an improved work/life balance.

Article solely for the use of hourtimesheet.com

Written by Alicia Clay

Indirect Cost Pools

You Can’t Manage What You Can’t Measure

A key aspect of complying with government regulations is creating processes and utilizing software tools that allow your organization to be compliant. Because we all know you can't manage what you can't measure, it is important to understand the basic categories of your organization's indirect cost pools and to establish a mechanism to efficiently track employee time against these pools.

Direct costs are traceable to the production of a specific good or service. Labor and direct materials, which are used in creating a specific product or service, constitute most direct costs.

Indirect costs are those cost necessary to keep your business in operation. Indirect labor costs make the production of cost objects possible but aren't assigned to a specific product.

Indirect Cost Pools

Overhead - indirect costs incurred that are not direct costs, but that can be attributed to a specific revenue-generating project or job. Any indirect labor or expenses that can be attributed to a certain project can then be distributed across those projects based on the projects’ direct labor hours, direct labor costs, or direct material costs

Fringe costs - include employee related costs including payroll taxes, fringe benefits such as health insurance and compensated absences (vacation, holiday and sick time).

General and Administrative (G&A) Expenses. These are management, financial, and other expenses related to the general management and administration of the business. To be considered a G&A Expense, the expenditure must be incurred by, or allocated to, the general business unit. Examples of G&A Expense include:

Salary and other costs of the executive staff of the corporate or home office.
Salary and other costs of such staff services as legal, accounting, public relations, and financial offices
Selling and marketing expenses

UNUSUAL INDIRECT-COST

Two major types of indirect costs are accounted for in a very unique way in the government contracting environment.

IR&D consists of contractor research and development efforts not performed under contract or grant and not required for the preparation of a specific bid or proposal, either government or commercial. IR&D is funded and managed at the contractor’s discretion from contractor-controlled resources.
B&P is comprised of contractor efforts to prepare, submit, and support bids and proposals, either government or commercial, whether or not the bid is successful.

Contract Type Matters

To recognize the impact that changes in indirect cost rates have on both the contractor and the government, it is vital to understand the various types of contracts used in government work. In some cases, increases in indirect costs are totally or partially paid by the customer.

A cost-reimbursement contract is used when the cost of contract performance cannot be predicted with accuracy, such as in the development of weapons systems.
Cost-plus-fixed-fee (CPFF) contract, the contractor is reimbursed for his actual cost, subject to certain government requirements regarding allowability, plus a negotiated fixed fee.
A cost-plus-incentive-fee contract (CPIF) is a cost-reimbursement contract that provides for a fee that is adjusted by a formula according to the relationship of total allowable costs to target costs. The target cost, target fee, minimum and maximum fee, and the fee-adjustment formula are negotiated at the outset. The fee paid to the contractor is negotiated after contract performance and final actual costs are determined, using the formula and the minimum and maximum fees.

Additional Resources

DEFENSE CONTRACT AUDIT AGENCY INFORMATION FOR CONTRACTORS

Making technology work for you

Making Technology Work For You

Today’s technology moves so fast that it’s not easy to keep up with. It seems like new tools are surfacing every day to help business owners and entrepreneurs save time, money and boost productivity. New technology empowers business owners to achieve what they set out to do and allows them to be creative while maintaining a high level of productivity. Businesses that want to stay relevant know that they must incorporate new technologies into their company’s growth strategy.

The trick to making technology work for you and your team will depend on how it’s integrated. You can use these tips to help your employees to successfully embrace technology:

1. Highlight the Benefits

Technology can do so much to make our lives easier, but the process of learning new technology can still be daunting. To ensure team member buy-in, help them understand the decision to implement new technology. Identify the limitations or problems in the current tools or software. Help your users see how technology could solve these problems. Even though fear is normal in the face of change, we can’t let fear stop us from moving forward.

2. Find Your Champions

There are always employees who readily accept new technology. These are your champions! They can help convince reluctant coworkers where no one else can. Have them be available for questions and training to those who are slower to adopt. Some employees may not be convinced of the benefits of technology until they see someone else do it.

3. Provide Training

Training is critical to the successful adoption of new technology. You must ensure that team members of all levels of technological know-how have the access they need to learn at their own speed. Training can be looked at as a two-step process: You need training from external sources (free at Hour Timesheet), and then you need a core group of internal employees who are comfortable in the new system and can help others if needed.

REASONS YOUR BUSINESS SHOULD EMBRACE TECHNOLOGY

By embracing today’s new technology your company will reap the benefits that keep them ahead of their competitors who fail to embrace technology, including:

Staying connected
Encouraging timely and accurate input
Ability to monitor employee productivity
Improving manager productivity
Improving employee accountability
Access to advanced business reporting and analysis

Additional Links

HTS QuickBooks Online Marketplace Listing

HTS QuickBooks Desktop Marketplace Listing

HTS Android Download Link in Google Play

HTS iOP Download Link in Apple Store

Tired of Deltek Timesheets?

Okay is Not Okay

Is your firm using a Deltek timesheet software solution for tracking employee time? If so, are you "okay" with its features and functionality?

Stop settling for "okay"! it's time for something better. Hour Timesheet offers you a solution that helps you end the nightmares and headaches that accompany timesheet collection and payroll processing.

Q #1 Are you tired of reminding employees that timesheets are due each labor period?

how about a system that sends daily and weekly timesheet reminders to both employees and supervisors.

Q #2 Are you tired of employees charging to expired charge codes?

how about a system that restricts employees charging to ended charge codes

Q #3 Are you tired lingering unprocessed timesheets from previous timesheet periods?

how about a system that ensures all timesheets are accounted for when processing?

Q #4 Are you tired of workarounds for employees working non-standard schedules?

how about a system that allows employees to open a timesheet with 8-days and is DCAA compliant?

Q #5 Are you tired of employees and supervisors not adhering to company policies?

how about a system that allows you to easily customize and adhere to company, state and contract policies.

Q #6 Are you tired of paying too much for time and attendance software?

how about a system that will provide a simple yet complex time and attendance software solution, while saving you money....guaranteed?

Try Now

Contact us today and if we can't show you in 5 minutes our solution is better than your current Deltek Timesheet "okay" solution...we will give you 3 months free.

Resources

The importance of company polcies

Irregular Work Schedules

The New Standard American Workday

QuickBooks Integration Q&A

Common questions and answers for Hour Timesheet and QuickBooks Integration

Question 1. How does QuickBooks sync data with Hour Timesheet?

Answer. We utilize the Web Connector (provided by QuickBooks) to sync company data between QuickBooks Desktop and Hour Timesheet in real time. The version of QuickBooks Online offers a direct sync between the two systems.

Question 2. What type of data does QuickBooks sync with Hour Timesheet?

Employees: The sync tool will import all “active” QuickBooks employees and vendors (optional) into your Hour Timesheet account. Only vendors that have a First and Last Name field value in QuickBooks will be imported.
Customers/Jobs: The sync tool will import all “active” Customer/Jobs in to your Hour Timesheet account.
Service Items: The sync tool will import all “active” Service Items in to your Hour Timesheet account.
Classes: (optional) The sync tool will import all “active” Classes in to your Hour Timesheet account.
Payroll Items: (optional) The sync tool will import all “active” Payroll Items in to your Hour Timesheet account.

Question 3. How do I add a new data in Hour Timesheet (employees, customers, jobs, etc)?

Answer. New data will need to be entered into your QuickBooks company file first. Once the new data is entered, you can use the web connector tool to import your new data in to your Hour Timesheet account.

Question 4. How will my employees receive their Hour Timesheet login credentials?

Answer. Hour Timesheet will send an email invitation to each employee with the link and login ID to the Hour Timesheet account included in the body of the email. Once the employee accesses the link, the employee will be prompted to create an initial password to login to Hour Timesheet.

Question 5. Can my employees track time against customers and jobs, service items, classes and payroll items?

Answer. Yes, your employees will be asked to select from a list of authorized charges. Employee authorized charges (EOC) are defined by the admin at the employee level. This feature enables the employees to only see EOC’s that are assigned to each user.

Question 6. How do I delete information in my Hour Timesheet account?

Answer. Once you mark the data (employee, customer, job, etc.) as inactive in QuickBooks, the data will be updated in your Hour Timesheet account upon performing the data sync.

Question 7. How does Hour Timesheet identify billable vs non-billable items on the timesheet?

Answer. By default, any EAC that includes a service item will be marked as billable time in QuickBooks.

Question 8. Can employees add comments to a timesheets?

Answer. Yes, Hour Timesheet includes a feature to allow employees to input general comments and daily comments.

Question 9. I exported my employee's time into my company QuickBooks file, but now I need to make corrections. How do I do this?

Answer. Hour Timesheet does not allow processed timesheet data to be edited. Hour Timesheet will display a link on the Timesheet Review page that will allow the user to create a “corrected” copy of the timesheet. The detailed audit trail will show the log of all changes made to the revised timesheet.

Question 10. Can multiple supervisors approve a single timesheet?

Answer Yes. Hour Timesheet will allow for multiple supervisors to approve a timesheet.

Question 11. We have a requirement for our employees to enter hours worked.daily, does Hour Timesheet include daily reminders?

Answer Hour Timesheet includes the option to turn on daily notifications to serve as reminders for those employees who forget to enter time daily.

Question 12. I track my employee leave balance data manually in an Excel spreadsheet because QuickBooks doesn’t include all of the options I need, can Hour Timesheet manage leave?

Answer - Hour Timesheet has a full-function leave management feature that will allow accrued and earned types of leave tracking.

Visit us in the marketplace

QuickBooks Online

QuickBooks Desktop

Additional Resources

QuickBooks Tutorials for Accountants

Attend a QuickBooks Training Class Near You

DCAA Compliant Timekeeping

Key Audit Requirements [Checklist]

Adequate DCAA timekeeping practices are critical to securing a contract award. Web-based timekeeping is acceptable by DCAA provided by DCAA provided the key requirements are followed.

Company timekeeping procedures must be documented in a policy or procedure handbook provided to all employees.All key elements of an adequate time keeping system must be addressed.
Every employee must record all of his/her time daily. Recording hours worked in advance or days after the fact such as at the end of the week is not acceptable.
Time must be charged by day and by project or job code as well as by indirect cost accounts (overhead, G&A, B&P, etc)
All employees must record 100% of time worked on projects to the proper job codes whether working on a government contract or commercial work.
Employees must record all indirect time not identifiable to a given project to proper indirect cost accounts (overhead, G&A, B&P, etc).
Employees must record all pto, vacation, sick, holiday and other leave time to the proper accounts.
All job codes that appear in the timekeeping system should be initiated by accounting or the system administrator. Project codes must be provided to employees authorized to work on a given project.
All timesheet entries must be the employee’s own. Time must be recorded based on work completed, irrespective of whether the time is billable or non-billable.
Under no circumstance may an employee work on one project and record time to a different project.
Under no circumstance may an employee work on indirect tasks and record time as direct costs to a project or vice versa.
Correction timesheet entries should be made by the employee. Correction timesheets are approved by the employee’s supervisor. Under unusual circumstances where the employee cannot make the changes to timesheets then accounting or the administrator may make such changes with the employee’s consent. All corrected timesheet data must be recorded in a detailed audit trail.
All employee timesheet data must be approved by the employee’s supervisor.
Employees should be provided documented DCAA compliance & timekeeping training whether by formal or informal means.
Time sheets must be maintained for a period of at least 2 years.
Monitoring of employee timekeeping compliance should be conducted by audit or floor checks randomly throughout the year.

Often deficient DCAA timekeeping compliance is the reason government contractors fail an audit. Sign up for Hour Timesheet today and work with an experienced implementation rep for a complete review your account for total compliance. All for FREE.

Live Demo

$3/user with NO fees for setup, support and no annual contract.

Additional Resources

Federal Acquisition Regulation Full Download

Federal Timekeeping Policies for Government Contractors (chron.com)

Record-keeping Requirements under the Fair Labor Standards Act

Top Timekeeping Tips

Top Employee Timekeeping Tips

Insight into how your employees spend time is critical. That's why employee timekeeping software tools make so much sense.

Knowing how much time your employees spend on overhead tasks, project, training, and unpaid leave is invaluable data for your business's future. Tools that track employee hours and employee schedules will greatly reduce your hours spent processing manual time cards.

Employee timekeeping is not just for hourly employees

Nonexempt employees need to track work time for FLSA compliance but having salaried employees keep a time sheet is helpful too. Exception-based time tracking helps employers track employee attendance and improve the overall management of daily resources. Tools and solutions that include the ability for employees to track hours worked on mobile devices will provide real time job costing and absentee management at the supervisor level.

Internal policies & approval workflows are the keys to a successful employee timekeeping software implementation.

Software tools are a dime-a-dozen, but it's how you use the software that defines your success. It's important to document your timekeeping policies and required approval workflows before you invest in a time & attendance tool.

Don't be afraid of internet-based employee timekeeping software tools

A detailed timesheet audit trail will flag when a user inputs timesheet data into your system from anywhere but the office. The activity log shows the IP address as well as each entry into the user's timesheet with a non-editable time and date stamp. Online employee time tracking software also allows for integration with your payroll system with a 2-way sync to and from your payroll software like QuickBooks Online or QuickBooks Desktop.

Microsoft Excel is for spreadsheet data, not for employee timekeeping

Yes, you can keep your employees timesheet data in Excel but is that really efficient? Don't be afraid to use the tools available to your organization to make you more productive. Rely on the experts...not Excel.

BOTTOM LINE... it's just smart business.

Features such as daily timesheet reminders, employee leave management and time card approval processes make Hour Timesheet the perfect choice for your organizations's timekeeping software needs. Available on the web or your iOS and Android mobile app store.