What are time cards? And why should small businesses use them?

The information recorded on a time card is more than just data. It adds up to real cash for employees, and an expense for the business. That clock-in and clock-out data informs timesheets that track employee working hours and tasks completed, which in turn informs payroll and compliance with labor laws and performance expectations. It matters to your business how that data is collected, and what tools you use to do so. And all of that starts with an unassuming time card. This article will walk you through why these little “cards” are important, and how you can make the most out of them.

What is a time card

A time card is a tool used to track and record the hours that employees work—specifically, when they clock in and out for their shift. A time card is either a physical card or device, or can be built into a software application. Time cards are designed to keep a record of an employee’s working hours. This record is then synced to a timesheet, informing payroll, shift scheduling, and general workforce management. This is an essential process and tool for businesses who employ hourly workers. It helps them track when employees arrive and leave, how many hours they’ve worked, and who was absent for their shifts. All of this helps businesses properly manage their workforce and financial obligations. Time cards, and the associated time clocks or timesheets, have been around for centuries (not quite as far back as the Flintstones would have you believe, but not far off). And that’s with good reason. They’re an effective way to track and manage hourly and shift workers, and are a popular tool in industries like construction, manufacturing, retail, hospitality, and more.

How does a time card work?

Time cards work by tracking the amount of time an employee spends working. When an employee arrives for their shift, they clock in. That starts the timer on their shift. When they leave, they clock out. They may also clock out for breaks during their shift. Once a clock in and out is in the records, a time clock or time sheet then calculates how long that employee worked for, and when. An identification assigned to the card makes a connection between that time data on the card, and the employee files in the payroll and scheduling system. This data is used to calculate payroll for the defined pay period, track how long each employee has worked in a given week, and to identify any absences that occurred. It also helps companies ensure that employees are arriving and leaving on time, and that they’re taking the required breaks.

What data is on a time card?

Time cards contain both variable and constant data. That is, each card contains information about an employee that does not change over time, and variable data related to specific shifts and pay periods. Variable data found on time cards includes:

• The pay period covered
• Dates worked
• Work start and end times
• Overtime hours
• Total hours worked for the pay period

Constant data on a time card includes:

• Employee’s name
• Employee’s ID number

This data coincides with fields in the timesheet or time clock, allowing administrators to easily populate their records with the appropriate variable data for each individual employee.

4 types of time cards

Your time clock largely dictates the type of time card you use for your business. Or, more specifically, how you get the information that’s on the time card into your time clock. Back in the day, employees or employers would physically input information onto a card, and then manually add that to a time clock or timesheet. As technology progressed, that process became digitized, allowing for immediate syncing between the time card and associated applications. Here are the four main types of time cards that small businesses have used over time:

• Punch cards. These are the old-school, physical time cards that were inserted into a punch clock to record clock in and out times (that’s the dinosaur’s job in the video linked above). Those time stamps were manually transferred to the employee’s timesheet to facilitate payroll and attendance tracking.
• Swipe cards. These are newer, electronic time cards that employees swipe through a machine to record their times. Once swiped, the data is synced to the electronic time clock. Swipe cards often double as an employee badge, giving them access to company property.
• Online cards. These are digital and online time tracking portals in which employees can input their clock in and clock out times. Employees are typically given an identification number that they can input into the system, which records their times into a centralized database.
• Mobile apps. Lastly, SaaS and cloud-based mobile applications made it possible for employees to record their clock in and out times on the go via their mobile devices. This is the current state of time cards.

While the technology behind time cards has changed significantly over time, the general concept remains pretty much the same—employees clock in, and out, and that information is recorded into the company’s systems.

5 benefits of time cards

Time cards are a valuable and reliable tool for both employers and employees. They help both parties keep tabs on time spent at work, ensuring clear and transparent payment. Here are some specific benefits of time cards for small businesses.

1. Improved employee productivity

As mentioned, time cards allow employers to track and monitor how long employees are working, and during what times. This helps them ensure they’re adequately staffing their businesses to maintain peak capacity and productivity at all times. In some cases—such as time cards for contractors—employers can also track how long specific tasks and projects are taking. Again, this data allows employers to adjust their staffing levels and employee scheduling accordingly. Armed with data, employers can flag instances where tasks or outcomes aren’t attained, despite adequate hours being worked. This is a useful rudder to help manage employee productivity. Lastly, time cards help to ensure that employees are accountable for the number of hours they work by creating an objective record of clock in and out times. This, combined with tracking task completions and employee impact, ensures that workers aren’t taking unsanctioned overtime hours to complete their work.

2. Easier attendance tracking

Having a clear record of when employees start and end their shifts encourages workers to be punctual and accountable for their own shift schedule. Employers receive a clear record of how often employees arrive on time or late, and how often they leave early or late. This information can be used to inform disciplinary action, to adjust workforce scheduling, or to offer flexible scheduling options for those employees who may be struggling with multiple commitments. For the employee, this record also ensures that they have a clear “paper” record of when they worked, ensuring they can hold their employer accountable in instances of inaccurate pay or other disputes.

3. Proven compliance with regulations

Each region, state, and country has their own labor laws related to the total number of hours employees are allowed to work in a day and week. These laws also dictate breaks and overtime. Time cards help employers collect all relevant data about employee working hours to ensure they are in compliance with all relevant labor laws and regulations. This data is invaluable in the case of an audit, lawsuit, or other inquiry. But, it’s also helpful to ensure all employees are working within the regulatory requirements for your region at all times.

4. Informed scheduling and labor planning

You can take the records from a time card and cross-reference them with sales and customer foot traffic data (or any other relevant performance and productivity metric). This helps inform intelligent workforce scheduling. For example, retailers can use their point of sales platform to identify their peak time periods during a given week. They can then cross-reference that data with their time card information to see if they are scheduling the appropriate number of employees during those times. If not, the company can adjust their schedules accordingly.

5. More accurate payroll and invoicing

As we’ve mentioned a few times so far, time cards help employees and employers keep an accurate tab on total hours worked. Once you have the data, apply it against the employee’s pay rate—and within a defined pay period—to inform how much money they'll receive on the upcoming payday.

Drawbacks of using physical time cards

Of course, time cards aren’t without their faults. This is especially true when using physical time cards that require a manual process to upload data to timesheets and payroll documentation. Not only does this require additional time and resources—both of which cost the company money—the process is inherently prone to human errors.

Potential issues associated with physical time cards:

• Payroll problems caused by inaccurate time tracking and data transfer. This can cause issues with employee morale and engagement, accounting issues, compliance and regulatory risks and, ultimately, disruptions to business performance.
• Inaccurate time tracking caused by either deliberate or accidental misuse of the time card system. This results in inaccurate data, which has a ripple effect of problems, as outlined above.
• Potential security risks due to the potential for time cards being lost, stolen, or tampered with. This can result in misleading and inaccurate timesheet entries or, in the case of time cards that double as employee badges, potential security threats for the company.
• Potential issues during audits and labor reviews caused by messy and/or inaccurate record keeping. This isn’t necessarily an issue if you keep thorough and accurate records from your time cards, but it becomes incredibly laborious and risky if you need to aggregate time card and timesheet data on a deadline for an audit or review. Key takeaway—always ensure your time card records are accurate, thorough, and stored in a way that’s easily accessible when needed.

While time cards are a tried and tested solution for track employee hours, they’re not perfect. Technology has progressed to the point where all of the best parts of time cards are available within a holistic platform that makes this process easier and more centralized. The ideal time tracking platform integrates all of the functions outlined in this article so far with your payroll, accounting, and scheduling software to help make end-to-end employee time management and compensation easier.

Why businesses should consider a time card app

Time cards apps typically double as time clocks, ensuring all data is integrated and centralized. In addition to allowing employees to clock in and out from their own devices—and tether that data to the employee’s file—time clock apps also offer the following benefits.

• They cut payroll mistakes by automating timesheet creating and syncing with payroll and accounting.
• They’re more secure than dedicated virtual logins for each employee and user access control.
• Some have settings to require identity verification via photo capture, geo-location, or biometric when an employee clocks in or out.
• They can notify the employee and employer if a clock in or out is missed
• Some can present data trends over time, helping employers intelligently plan their scheduling requirements
• They reduce manual and repetitive tasks by automating timesheet population and data transfer to payroll and accounting

All of these above helps make time tracking more accurate, secure, and streamlined than traditional time cards.

Try Homebase: your all-in-one time card and time clock app

Homebase is the best free time clock app for small businesses and hourly teams. It’s an all-in-one team management tools that includes and integrates:

• Time tracking
• Scheduling
• Hiring and onboarding
• Payroll
• Team communication
• HR and compliance

With the Homebase time tracking app, employees can either clock in or out from their mobile devices once they arrive at work, or use a tablet, computer, or POS device that you have set up for this purpose. From there, you’ll have everything you need to track their hours, breaks, overtime, time off, and pay. Ready to try Homebase for time tracking? Start now for free.