How to Reduce Overtime Costs

Running a small business, you have to be mindful of every dollar. A weekend of bad sales or an unforeseen issue with inventory can be the reason a business turns a loss instead of a profit. That’s why reducing overtime costs is key.

One of the largest single expenses of every local business is labor. A good rule of thumb is to keep labor costs under 30% of revenue. Nothing can make labor costs creep up quite like overtime — that time-and-a-half your employees earn when they stay late or arrive early.

Reducing overtime costs will save you money and ensure that your profits can go back into the business or your pocket. So how can you reduce overtime costs?

Homebase is a free time tracking and scheduling software build to help you manage your overtime costs. With labor cost reports and free timesheet tools, you can keep your costs in check no matter where you are.

Want to see how Homebase can help you manage overtime costs? Read more below.

Familiarize Yourself with Local Laws

Depending on where your business operates, there may be specific local laws that govern overtime pay. For example, in the state of New York, some employees must be paid 1.5 times their usual pay rate when working over 40 hours a week. The Labor Standards Act FLSA also enables having overtime exempt employees, so knowing which of your employees are eligible for overtime pay is crucial. This can not only reduce overtime hours paid, but it can also keep you in compliance with local laws.

Homebase has state labor laws built into our software so you can focus on running your business. Ready to get started? Sign up free today!

Use Sales Forecasting Tools

Once you are aware of your local labor laws, you’ll need to put a robust sales forecasting system into place. Sales forecasting ensures the right number of employees are scheduled for each shift, given your expected sales and foot traffic.

Sounds tough right? Homebase has built in tools to make sales projections a breeze. These sales projections calculate labor as a percentage of sales and make sure it stays under that 30% benchmark.

Put Processes in Place

Make it clear that employees are only allowed to clock in when their scheduled shift begins. Early clock-ins can slip under the radar and add unexpected labor costs. With the free time clock app from Homebase, you can make sure employees are clocking in on time. Plus with our free mobile app you can monitor labor costs and employee punctuality from any device.

Ready to get a handle on overtime costs? Sign up for Homebase today!

Communicate Expectations To Your Team

Let new employees know that you closely monitor hours in a workweek and that they should usually only work the number of hours they have been scheduled for. In cases where overtime is required to be able to meet customer needs, have overtime provisions in place for manager approval.

Clear expectations are especially important if your business is remote. Fostering a culture of trust and honesty is crucial to your success. Having remote hourly employees means that they need to be able to clock-in at different job locations. With the Homebase GPS-enabled time clock, you can make sure that employees are clocking in at the right location.

Set Alerts

On some occasions overtime work is unavoidable, so it’s important to be aware when employees are working overtime and when you’re paying overtime. With the free Homebase mobile app, you can set up quick alerts on your smartphone to maintain your peace of mind and reduce overtime costs at the same time.

Hire More Employees

Do employees frequently need to add extra hours to be able to get their work done? That might mean that you need to hire additional employees. As your sales grow, your staff growth will need to keep pace.

Don’t get caught in a cycle of requiring overtime each day just to keep your business on track. Spend a bit of time to hire the best new employees so that your business can run smoothly.

Ready to reduce paid overtime costs? Sign up for Homebase’s free employee scheduling tool to manage scheduling and time tracking all in one place.

Hiring the wrong employees or losing top employees can also be very costly for your business. Read our tips on how to hire the best employees and how to keep your top talent.

Related posts

The #realtalk roundup: May 2021

Last month we covered a variety of small business hot topics, including employee handbook tips and advice, the Restaurant Revitalization…

Read article

The #realtalk roundup: April 19, 2021

Now is the time to start the hiring process if you’re looking to increase your workforce for the summer. Whether…

Read article

Customer story: Granny Scott’s Pie Shop

About the business Type: Quick Service Restaurant Location: Lakewood, CO Employees: 10 Food Provider: US Foods Background After years of…

Read article

Team management software for construction crews

It’s no secret that the construction industry comes with its own set of difficulties. It can be tedious to keep…

Read article

Time tracking for janitorial and cleaning businesses

Time tracking for your janitorial or cleaning crew is really important but also can be difficult. Your crew is likely…

Read article

5 tips for tracking labor costs in real-time (+how to lower them)

There are many costs to consider when running a small business. From materials, advertising, payment processing, and inventory to payroll…

Read article