The Cost Of Wasted Time: Quantifying Untracked Hours

You sit at your desk, fingers hovering over the keyboard, but nothing gets typed. Your eyes stay glued to the screen while your mind drifts away for a few minutes before snapping back to work. Wasted time? This happens more than a dozen times in a day, and then you realize you’ve done less work than you would have typically done within the same time.

Research confirms this alarming reality: 79% of US workers get distracted within an hour, and nearly 60% can’t focus for even 30 minutes without getting sidetracked. The average employee loses approximately 720 hours per year due to workplace distractions, costing US businesses an estimated $650 billion annually in lost productivity.

Or it might not be about you zoning out. It could be your employees. They spend countless minutes every day filling in manual timesheets, wrangling endless spreadsheets to log activities, or repeatedly searching Google for the same information.

On any given day, a few minutes here and there might seem harmless. But stack those wasted moments over weeks, months, and years, and the numbers become staggering hundreds of hours lost. Each hour represents a fraction of your revenue left on the table.

The financial impact is staggering: manual timesheet processing and administrative errors can cost businesses thousands annually. Implementing automated time tracking can save a few thousand dollars per year through reduced errors, improved productivity, and optimized resource allocation.

In this article, we will explore what else wasted time can cost your business and how to avoid such outcomes through proper time tracking.

What are the main causes of wasted time?

A survey conducted by Gleematic showed that its employees spend over 10-25% of their work time on recurring tasks. So, if you work the standard 8 hours a day, that’s about 2 hours spent on repetitive tasks, most of which could have been automated.

According to PwC’s Annual Global CEO Survey, 60% of CEOs believe time spent on routine tasks like managing documentation, payroll administration, and email exchanges is wasteful and holds back more important projects, ruining workplace attention span.

Leigh McKenzie, Community Advocate at Traffic Think Tank, believes, “the most significant time drain for freelancers usually happens during brainstorming sessions. Let’s say you’re a graphic designer who charges by the hour. You can only invoice a reasonable amount of billable time, even if you took a dozen hours to couple the ideas out of your brain. Which means all the valuable time spent on ideation goes unrewarded.”

But beyond repetitive tasks and unrewarded hours, the following factors can also cause wasted and untracked time:

1. Inaccurately logging billable hours

“It’s quite an easy habit to second-guess how many billable hours you worked for a client or how many hours your employees spent on completing a task, which can result in time leakage. You end up logging 2 hours for a 3-hour task, or in some cases, you overestimate the time spent and inappropriately bill your client”, Jeffrey Zhou, CEO and Founder of Fig Loans, shares.

2. Switching between tabs and tools

The burden of using multiple organisational applications lies not only in the expenses of procuring them, but also in the time spent switching between them. According to a Workgeist report, 43% of employees spend too much time moving between varying tools, and 45% say it narrows their productivity.

The cost of task switching is scientifically proven: researchers found that productivity can drop by as much as 40% when subjects try to do two or more things at once. Additionally, when employees switch focus between unrelated tasks, it can take up to 23 minutes to regain full concentration.

3. Forgetting to start/stop timers

It’s one thing to have a timer that works. It’s another thing to think you’ve put it on when starting a task or off when done. Often, the former happens, and you end up second-guessing how many hours you spent instead of an accurate value. And sometimes, it might be a failure to stop the timer, which makes it difficult for you to know just by how much you should shorten the tracked time. Try an automatic time tracker instead, like Paymo Track (which you can download for free):

4. Using ineffective or non-integrated software

Morgan Taylor, Co-Founder of Jolly SEO, says,

“Long menus, poor interface, and complex jargon that muddle your business hours. Time management software should be your time saver, but if you choose the wrong one, it could become your time eater instead. For instance, you need to switch tabs to add most time trackers manually. This costs minutes. Moreover, you might even forget to start your timer.”

5. Clocking in, but not working

An average employee spends around 45 minutes of work time on social media for non-work-related activities, while their time tracker keeps adding figures. So, because your employees clocked in and their timers started rolling, it does not mean they are working.

Additional research reveals that employees waste approximately 1.5 hours daily on social media during work hours. Furthermore, 52% of employees admit to using phones or work computers for non-work activities, while 36% of Millennials and Gen Z spend two hours or more checking their smartphones at work

What can wasted and untracked time cost your business?

Wasted time and untracked time are two sides of the same coin. For one, you or your employees spend hours on tasks that could be handled in minutes. For the other, you either forget to track at all, neglect tracking minor activities that add up to a lot, or get hooked by an ineffective time management tool.

Once or twice might be passable, but when it becomes a loop, you risk:

1. Dropped productivity

In the same report from Workgeist, 45% of employees complained of reduced productivity due to spending too much time switching tabs. By the way, your brain might take another 8 to 10 minutes to refocus on the new tab. Add it up, and you’ll find out your employees actually clock more time while achieving less.

Moreover, time-consuming repetitive tasks can cause burnout, leading to employees spending more time on the same task with less effectiveness.

The productivity impact is measurable: multitasking can hamstring productivity by as much as 40%, increase stress levels, and even reduce IQ temporarily. Research shows that only 2% of individuals can effectively multitask, but most overestimate their abilities, resulting in poorer performance across all tasks.

Employee engagement statistics show that only 36% of employees are actively engaged at work, with disengaged employees costing the global economy approximately $7.8 trillion annually in lost productivity. When employees are overutilized—spending 75% of their work year in an overwhelmed state—burnout becomes inevitable.

2. Payroll inaccuracies and underpaid effort

“If you pay your employees by the hour without a functional and integrated time tracker, you risk payroll errors, underpaying, or overpaying them. For instance, an employee might second-guess their billable hours, and you find out that it does not correspond to the assumed work time for that task. This causes a discrepancy in the submitted invoice or payroll and expected billables. Ultimately, you either underpay them or end up overpaying”, Ben Kruger, CMO at Event Tickets Center, explains.

3. Revenue loss

For a business owner, overpaying results in cost deficits. For instance, Tesco had to tell staff who had been overpaid an excess of less than $500 to keep it instead of refunding due to logistical struggles, and of course, PR.

Beyond the costs of overpaying, reduced productivity directly impacts your deliveries, ultimately reducing your total revenue if left unaddressed.

Companies with highly engaged employees show 21% higher profitability and 17% higher productivity compared to those with disengaged workforces. Conversely, businesses suffering from poor time management and employee disengagement can experience significant revenue losses that compound over time.

For freelancers, underbilling due to time tracking issues results in missed revenue. Reduced productivity due to spending more time on repetitive tasks, switching tabs, or distractions incurs the exact cost.

4. Client disputes over billing

Most importantly, improper time tracking can result in overbilling your client, leading to potential disputes. That’s the last thing you want to see, as it can sour your client-business relationship and lead to contract termination.

One lost client means you need to invest in finding another client. Think about the expenses and effort. Besides the financial implications, a client dispute can harm a company’s reputation. They see you as untrustworthy and leave negative reviews, which can damage your business, whether as a big brand or a remote freelancer.

5. Project overruns due to time mismanagement

Reduced productivity due to time-wasting issues affects project delivery. This causes a clash between your estimated delivery time and eventual submission, delays completion of the overall project, and also affects the relationship with clients.

Projects also begin to overlap, especially when working on multiple deliverables with tight deadlines. It gradually becomes a loop of delaying one submission to complete another.

4 steps to keep all your minutes in check

Keeping all your minutes in check is essential to keeping your revenue tight, improving client relationships, and preventing project overruns. Here’s how to do that:

1. Implement company-wide time tracking

Time tracking should not be limited to client-facing teams alone. That’s because every department, from administration to creative teams, contributes to the company’s productivity and profitability.

• Begin by assessing the time each task should take for each department, then use this information to define the delivery timeline for all projects.
• Take into account the uniqueness of each department’s employees and their weaknesses, as well as task difficulty, when determining the time per project.
• Decide whether to use manual timesheet filling, which is time-consuming on its own and not recommended, or a time tracking software.
• Make your time tracking strategies clear before onboarding new employees or contractors.

2. Adopt quality time tracking software

The key to effective time management and tracking is choosing the right employee time tracking tool. You need to look for platforms that integrate with your project management software and other workflow apps.

Alternatively, you can adopt a unified program that offers not only time tracking and management but also project management and other essential tools to keep your business running smoothly.

For example, Paymo, our all-in-one platform, combines time tracking with project management, invoicing, and team collaboration. This helps your business reduce inefficiencies, prevent untracked hours, and streamline your entire workflow.

3. Automate repetitive processes

Nicolas Breedlove, CEO at PlaygroundEquipment.com, says,

“Repetitive tasks are sometimes crucial, regardless of how minor they might seem. However, you need to automate them to free up time.”

“Start by identifying tasks that are small but critical, such as logging time entries, generating invoices, sending payment reminders, or updating project statuses. Then look for an automation to heavy-lift them”, Nicolas adds.

4. Set clear time tracking policies

Every employee should understand the importance of time tracking, how to log billable hours, the distinction between billable and non-billable hours, and the process for logging payroll at the appropriate time.

Employee engagement research shows that 85% of employees are motivated by effective communication, and clear policies contribute significantly to this engagement. Connected employees are 68% less likely to feel burned out when they understand expectations.

Here’s a summarized checklist to follow:

When to track: Define whether employees should track time in real time, daily, or at the end of each week.

What to track: Clarify which tasks are billable, non-billable, and internal.

Compliance expectations: Communicate deadlines for submitting timesheets and consequences for non-compliance.

Who to reach: When there’s an error in time logged or employees need someone to go for clarification.

Conduct regular time audits to ensure compliance with established standards. It could be weekly or monthly, but should focus on identifying discrepancies in logged time, productivity, and correlation with effective time spent working, and addressing issues causing time wastage without micromanaging your employees.

Wrapping up

Wasted time can cost your business revenues, clients’ trust and contracts, reputation, and productivity, regardless of whether you’re a freelancer or not. To effectively prevent such outcomes, first identify factors that are sapping work time and their impact.

Then implement company-wide time tracking structures, bring in a unified time-tracking software like Paymo for centralized project management, automate repetitive tasks, and set clear time-tracking policies to guide compliance.