Reduce Payroll Costs By Stopping Time Card Fraud
If you’re a business owner or manager you’ll probably agree:
Payroll Costs Can Make Or Break A Business
Payroll is one of, if not the most, significant costs associated with running a business.
Fortunately, there are a few strategies you can implement that will help reduce this cost, and make you business more profitable.
By tightening up time card reporting, even a small business can save hundreds of dollars a week. As you well know, this saving adds up.
With this in mind:
Here are some simple but solid strategies to help you both prevent and identify payroll fraud, and ultimately take action against it.
Save paying for extra minutes every day by using an exact time method
What do we mean by an ‘exact time method’? Basically this means doing away with rounding.
Whether it’s recording times to the nearest 15 minutes or 30, these minutes ‘either way’ can really add up, particularly if an employee is regularly rounding up.
This sounds simple enough, but there is a catch: How do I calculate the hours for payment?
If you are still using a manual timekeeping approach, one of the real benefits of ‘rounded’ times is that they are much easier for you to calculate.
• 9:30am to 4:30pm? Easy, 7 hours.
• 9:36am to 4:23pm? Hmm, this is a bit harder.
This is the classic dilemma of manual timekeeping. Although the first example is much easier to process, in the second example the employee almost worked a quarter of an hour less, however using the rounding method they would have been paid the same amount.
Now imagine this for every employee every day, and it’s not hard to see how hundreds of dollars can be lost to this rounding method every week, especially if an employee is deliberately rounding up.
Benefits of exact time method:
• You are paying for what was worked exactly
• There is less room for disputes over ‘feeling like’ an employee is consistently rounding their hours up, something which is almost impossible to prove using a time rounding strategy
Drawbacks of exact time method:
Make Buddy Punching Much Harder By Using Personal Accounts
Buddy punching is the practice of clocking in or out on behalf of another staff member. This can be one of the ultimate forms of time card fraud, as it can be done to reflect a staff member was at work when they weren’t.
Surprisingly, even with tools such as modern P.O.S. systems this is still a hard problem to solve, as anything where a pin is used to clock in or out can be easily forged by another staff mate.
Personal Accounts to the rescue!
By tying the ability to clock in or out to an online profile, whether it be in a smartphone application or a web browser, buddy punching suddenly becomes much more difficult.
With a system like this, the only way to perform buddy punching would be for one employee to log out of their own account, log back in using the credentials of their friend, perform the clock in or out, and then log out and back in as themselves so that they can continue to clock in and out.
You get the idea...
Although not impossible, this is a much harder thing to do on the way out the door than simply entering a colleague’s pin number, or writing a time next to their name.
Benefits of an account based clock in system:
• Much harder to perform fraudulent buddy punching
• Enables tracking of other useful information such as jobs worked
Drawbacks of an account based clock in system:
• Slightly more initial set up requirements, with employees having to make their own account
Ensure Staff Are Where They Say They Are Using GPS
It sounds obvious that a staff member should have to clock in and out From Work, but in a busy workplace this can be hard to enforce, and can often result in employees ‘phoning in’ their hours remotely, a practice that is very open to fraudulent reporting.
But here's the thing...
We have these things in our pockets called smartphones, which happen to be fairly good at recording locations.
By using Applications that leverage the GPS of a smartphone, employers can record the location of clock ins and clock outs, and have a much better idea of where the employee was at both times.
Benefits of GPS clock in tracking:
• Clearer picture for employers of where their staff were at critical times
• If an employee knows their location is being recorded, they will be less likely to try and clock in and out at fraudulent times remotely
• Can be an important tool for improving safety and accountability for remote workers
Drawbacks of GPS clock in tracking:
• Location services of phones can’t be relied on 100%, they may be disabled by the user or just fail to work on that occasion. For this reason these locations should never be relied on as absolute proof of time card fraud.
• May lead staff to feel they are being ‘tracked’. Transparency is the best way to negate this (staff should also be able to see the locations that are recorded)
We hope that you found these tips useful. Please let us know about your own experiences with payroll fraud below in the comments!