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Work Management
Last modified date

Jun 9, 2023

7 Benefits of Time Tracking for Your Business

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Laurențiu Bancu

Blog average read time

7 min

Last modified date

June 9, 2023

Time perception is tricky. Have you ever felt you’ve been slaving away for hours only to find that barely an hour has passed?

Since our perception is subjective, we need an objective way to evaluate how we spend our time. This is where time tracking comes in handy.

Time tracking is the measurement and documentation of time spent on any kind of activity. It is the core functionality of any work management solutions. Tailored to suit every need, such tools abound on the market to help individuals and companies manage personal or work-related projects.

There are several benefits of time tracking besides task management or creating time entries and reports. Here’s how time tracking helps you:

1. Identify non-essential activities

Time is a limited resource. If you don’t track it, there’s a high probability that you have no clue about how much time is wasted on non-essential activities. You might even be shocked when you find the truth.

Time-tracking also reduces multitasking and distractions. When you track time on a set task, your brain won’t feel like switching between tasks as often. Whenever your mind wanders, you can glance at the timer and remind yourself of the task at hand.

2. Increase your well-being

Time-tracking leads to improved time awareness. You’ll notice how much you worked, and whether to take a break.

It reminds you to take a break, to rest, and not to overwork yourself. Make sure you take regular breaks—go for a walk, if possible. When working remotely, time tracking can give you the cue when to call it a day and reduces the chance of burnout in the long run.

Note: Time tracking can also be used as a metric to assess your company’s turnover rate, that is, employees’ intention to quit. Speaking of turnover intention, that also happens when employees feel overworked. This is why time tracking facilitates workload distribution managers see which employees are under or overbooked and can make adjustments to their workload.

3. Define and clarify your goals

When you track how you spend your time, you’ll be able to see if you’re aligned, on the right track to accomplishing your goals.

Many people are living without having defined clear goals. Tracking your time and taking a closer look at how you spend it might help you, or even “force” you, clarify and define your goals. Learn how to set SMART goals or actionable OKRs.

4. Tune and improve task estimates

No more guesstimates. By consistently tracking your time, you can tell how many hours you can or should put in for a specific task or project. Compare your initial estimates with how long it really took to accomplish certain tasks so you can better estimate future tasks.

5. Create daily routines and habits

Tracking your time might help you create daily routines and habits. In time, habits such as these will help you fight against procrastination and improve your personal productivity. This is crucial for people who have problems with procrastination that are mostly rooted in fear of failure or hedonistic delay.

Tip: A great way to manage your work or studying time is to use a Pomodoro app – also known as the clock that resets itself after 25 minutes to allow for a 5 minutes break. Couple the Pomodoro with online Kanban boards—actionable cards that are like sticky notes on a whiteboard—for improved productivity and workflow.

6. Adjust your work rates

Time tracking makes perfect business sense. It’s great proof of work. Not only does it identify top performers (and even reward them), but it also spots possible scope creep, project inconsistencies, miscommunication, and poor time/budget estimates.

If you charge by the hour, tracking your work time is mandatory so you can get paid/charge fairly. If you have a flat rate, tracking your work time is still a good idea as it will give you a price/hour and allow you to compare yourself with those who offer similar services but charge by the hour.

7. Time tracking is easy to do

Keeping track of your time has become a very simple process, for your business, through the use of online time tracking software no matter where you are: at home, at the office, or on the go. You only click Start when you begin an activity and Stop when you’ve finished.

A mobile time-tracking app is an absolute must in 2023. Whether you’re on the go, working from home, or back at the office, there’s no quicker setup than a few taps on your smartphone.

Note: Mobile time-tracking apps come in many shapes and sizes. Some have a simple stopwatch and a calendar view, while others offer robust features like task management, timesheets, and active timers. Here are 8 time tracking apps to try out.

Ten time tracking best practices

Time-tracking can seem daunting at first. I’ve compressed time tracking best practices into 10 actionable and easy-to-follow tips:

1. Don’t track every small thing.

Start the timer only if tasks take more than 10 minutes. Otherwise, it’s tedious to create tasks/projects for activities that take a few minutes, if not seconds. Imagine some of your daily entries as RSVP Zoom call with Client A – 17 sec, Send email to Mr. Smith – 3 min 13 sec, Remove desk clutter – 1 min 58 sec, Sort mail – 2 min 43, etc.

Maybe all these tasks pile up to 10-15 minutes a day at best (while tracking them wastes half the time). Don’t fall into the trap of perfectionism, tracking everything down to the nanosecond. It’s not BIG BROTHER!

Also, it’s normal to take a break when needed, to let your mind wander for a few minutes, to stretch and move around for a bit. The truth is, 5-6 hours of deep work are healthier and definitely more productive than 8 hours of non-stop grinding. It’s deep work that good managers look for.

2. Bet on idle time detection.

Get a time-tracking app that has idle detection . If there’s a distraction while working on your task and you have to be away from the keyboard, then you don’t have to worry about the stopwatch. It will automatically detect idleness after a set amount of time, letting you keep or discard the idle time.

Ours is available in the robust Paymo Track, which is free of charge. Be sure to check it out!

3. Account for admin time in a separate task.

Checking emails, filling timesheets, project management tasks, and so on. Set some time aside just for administrative tasks. It’s better to batch them all in one task. Although they don’t amount to billable time, they’re still an important aspect of your job.

4. Set hourly budgets for tasks/projects.

Setting hourly budgets helps you estimate how long a project will take, account for disturbances and unexpected tasks, and even plan some float time (how long a task can be delayed without impacting subsequent tasks). So, after you review your work or do a project postmortem, you’ll be able to make more accurate/realistic adjustments to future projects.

5. Add time entry notes.

First, it’s great for proof of work, especially if you are dealing with nit-picking clients with demanding standards. Second, whenever you review your past projects, you’ll know what did or didn’t work. So, it will help you create and adjust your own processes and conventions.

6. Do not incentivize time tracking!

If you do so, you’re setting yourself up for failure because you’re basically giving employees the green light for Parkinson’s Law. They’ll slow their pace down to fill up as many tracked hours as possible while making sure they reap the benefits of whatever bonus you’re rewarding them with.

7. Set tighter time limits.

Be more intentional with your time. Remember the advice about cutting your team meetings down to 10-15 minutes? We’ve adopted this as a team, and I have to say, logging only 31.5 hours of team meetings over 6 months is simply awesome.

8. Round-up time entries.

Remember the argument against time theft? You’d think rounding up time entries is frowned upon, but it is actually legal and regulated by the Department of Labor. Rounding up time entries makes payroll easier for certain types of work – usually consultancy-based projects like lawyers, architects, and consultants do.

9. Take short breaks

If you’re using the Pomodoro Technique, don’t skip the 5-minute break. For every 1.5 hours worked, be sure to take a 15-minute break. There’s no such thing as hyper-productivity and optimizing every minute. Your brain needs to relax and defocus after long stretches of work.

10. Compare billable vs. non-billable time entries.

You’ll get a clearer picture of the ratio between tasks that can be billed back to the client (thus, “billable”), such as client communication, project planning, production, revisions, and tasks that don’t depend on or relate to the client. Non-billable hours are paid by your employer, not your client. Most project management software gives you an overview of your projects, clients, and hours worked (billable and non-billable) on a dedicated dashboard.

paymo dashboard@2x

Time tracking and increased productivity

Think of time tracking as a fine-tuning method for a more productive and intentional way of living.

On a personal level, keeping track of your tasks and endeavors will give you a better picture of your time spent outside your workplace. If you can’t remember what you did last week, then that’s a problem.

When you track your activities, you are basically sketching out all your commitments. You can sift through them and gain insight into what truly matters, e.g., quality time with your loved ones, honing that skill or craft, and so on.

On a professional level, there’s a plethora of time-tracking benefits both for companies and employees:

If you want to boost your productivity exponentially, tracking time gives insight into optimal patterns of work throughout the day to assist employees in work-from-home environments. Optimal patterns of work – besides external factors like child-rearing and quiet hours – include the influence of your circadian rhythm on mental efficiency, the post-lunch dip with regard to performance, and the impact of time of day on cognitive functions.

One simple example is the morning lark/night owl paradigm. Some people are extremely productive in the morning, while others get in the zone in the evenings. When do you engage best in deep work? When should you avoid the post-lunch dip? Time tracking can give you an objective answer, allowing you to optimize your productivity, which will, in turn, give you a major confidence boost.

Whenever you track your time, you remind yourself that effort trumps talent. The truth is that you have to put in the hours to get things done. After you track your time for a while, reflect on your accomplishments.

Over to you

If you’d like to explore the project manager career path, this guide shows you how to get started in pm without a degree.

If you already manage several employees, consider reading reviews from top employee time tracking software. These focus more on the team as a group and keeping a tidy timesheet for organizational purposes, which is good because you can turn your time entries into reports and invoices.

If you’re interested in software for timesheets, here’s a top list of tools you can use to help with recording work efforts on a weekly basis. If you are looking for web-based software for invoices that are completely free, we made a list of the best four tested-and-reviewed, fully free invoicing tools.

If you need a simple invoice generator with signature capability, opt for an invoice builder.

First published on May 13, 2015.

Start tracking your time now! Create timesheets and time reports to watch your progress.

Laurențiu Bancu


Laurențiu started his marketing journey over 18 years ago and now leads a marketing team. He has extensive experience in work and project management, and content strategy. When not working, he’s probably playing board games or binge-watching mini-series.

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