Why is Time Tracking in Organizations Important? 15 Benefits

Is time tracking worth the hassle?

Managers may fear it will add unnecessary micromanagement, hindering leadership and project oversight. 

On the other hand, team members could see it as an intrusive initiative, disrupting their workflow and adding pressure to constantly track hours.

However, the benefits of time tracking are significant. 

Implementing a simple time recording system can streamline processes, ensure accurate billing, and help you gain valuable insights into productivity. Time tracking not only saves time but also increases transparency and accountability within your team.

Ready to see how time tracking can benefit your workflow? 

Let’s dive in.

Benefits of time tracking for business leaders

Here’s how time tracking helps business leaders. 

1. Better financial oversight

Time tracking gives you visibility and actionable data that you can use to measure and improve business profitability. 

For example, let’s say a marketing agency actively tracks and monitors the team’s work hours. Analyzing this time data can show inefficiencies, bottleneck tasks, and time spent on non-billable tasks.  This insight helps you streamline processes, reduce non-billable hours, and enhance profitability

This awareness helps managers streamline processes and reduce non-billable hours, ultimately improving profitability. It also ensures accurate billing by tracking billable hours precisely.

With a tool like Toggl Track, which tracks time spent on billable and non-billable work, it’s easy to monitor and improve profitability. 

Platinum Companies, a hospitality service provider, found this when they started using Toggl Track. They increased their billable hours—and therefore revenue—by 10% across the company.

You can track time in Toggl Track automatically, manually, or using the start-stop timer. Automatic tracking captures all activities without interruption, manual tracking allows for accurate time entries, and the start-stop timer provides an easy way to log work sessions from anywhere.

To make a time entry billable, you need to click on the “$” icon next to it, as shown in the screenshot below.

Time entries are automatically marked billable if the project they belong to is billable. 

Toggl Track also allows you to set billable rates on a workspace, project, or team member level to further streamline your billing process. This flexibility ensures accurate billing across different projects and team structures.

To add a workspace billing rate:

1. Click Settings in the navigation bar and select Rates and Costs Settings.
2. Set an hourly billing rate for your workspace and select a default currency for the workspace.

To add a project billing rate:

• Create a new project or edit an existing one.
• In the Projects Edit popup, go to Billing.

To add a team member billing rate:

1. Go to the Team tab on the Projects Page.
2. Add individual rates for each team member.

The Insights feature shows accurate data on project earnings, billable hours, labor costs, and income vs expenses so you can track a project’s costs.  This data helps you make informed financial decisions and optimize project profitability.

Here are some more ways Toggl Track can help you improve profitability:

• Set billable rates on the workspace, project, and team member levels.  This flexibility helps you test billing models and gain profitability insights at a granular level.
• Create time estimates and track project progress and project budgeting.  Accurate time estimates allow you to set realistic deadlines and budgets, ensuring projects stay on track and within budget.
• Get real-time profitability insights with highly visual and detailed reports.  These reports help you analyze, understand, present, and improve your business efficiency.

2. Improved productivity

Comprehensive timekeeping gives managers valuable insights into team members’ workload, progress, and efficiency.

With this visibility, managers can allocate different tasks more effectively, identify potential workflow issues, or spot productivity gaps.

By managing workflows better and improving productivity, you can also improve job satisfaction—just like Twinkl, an educational publishing firm, which reported a 95% increase in job satisfaction thanks to tracking time with Toggl Track.

3. Better resource allocation

Time tracking shows how much tasks, projects, or other work-related activities take. This helps leaders allocate resources better to keep projects on track and within budget. 

They can balance workloads to avoid burnout or underutilization and support employees in managing their time better and maintaining a work-life balance. 

RougeMark Studios, a California-based creative agency, was able to reconfigure budgets, contracts, and schedules and boost resource allocation after Toggl Track gave them deeper insight into their labor and the time taken to complete tasks.

The Weekly Report in Toggl Track provides a quick overview of the team’s tracked hours and the duration of each task.  This helps managers allocate resources more effectively and identify productivity trends.

To further help allocate resources effectively, Toggl Plan has an Availability Overview feature.

In this view, you see each team member’s available hours and booking percentages.  

4. Improved decision making

As you’ve already seen, time tracking is all about visibility. When you’re in the know regarding your team’s time management, you are empowered to make well-informed decisions. 

These decisions might mean growing your business, hiring more people, or planning team capacity differently. After joining Toggl Track, the fintech business SideTrade could confidently make project scalability decisions, as they had insight into project hours.

Let’s take hiring, for example. If you’re an agency owner who reviews time tracking data regularly, you might notice some tasks take longer than estimated. This may cause delays and unwanted expenses. 

To avoid this situation, you might decide to hire additional people to keep up with the project schedule. 

You can use Toggl Track’s Detailed Reports to view task durations in-depth. 

5. Client transparency

When businesses track their time consistently and accurately, they give stakeholders and clients clear visibility into their time on specific tasks and projects. This transparency builds trust, improves collaboration, and reduces the potential for disputes.

This helps build transparent relationships with clients, improving trust and collaboration and minimizing the chances of conflict.  

Software agency Xmartlabs found that detailing every billable hour with Toggl Track helped them strengthen client relationships through precise billing and transparent reporting.

Toggl Track has two types of time reports: Summary and Detailed reports, which you can share with clients for transparency. 

Go to Reports in the main Toggl Track sidebar to access the Summary report.

You can filter your reports by team, client, project, task, billable status, tag, and description here. 

The Pie Chart in this report shows total hours tracked and billable and non-billable time.

Also, the Detailed report gives an in-depth look at tracked employee time. You can access this report by going to the Reports tab and selecting Detailed from the top center of the screen.

To maintain transparency, you can export these reports in PDF, CSV, or Excel format and share them with clients. 

Time tracking benefits for project managers

For project managers, time tracking has the following advantages:

1. Enhanced project monitoring

Active and accurate time tracking gives insights into team productivity, work allocation, and project progress. These insights enable better project delivery, resource management, and strategic planning. 

These insights can help you monitor your team’s time habits, employee productivity, time management, employee performance, and project profitability. 

They can also spot if the team spends much time on non-billable work and address this issue before it becomes serious.

Toggl Track’s Insights functionality helps you maximize your time tracking data. Twinkl found this information beneficial, as they could judge whether their projects were completed efficiently—something they couldn’t do with spreadsheet timesheets.

This report allows you to easily analyze project and employee performance and profitability and visualize data trends and comparisons.

The Project Dashboard feature also helps you monitor project progress and analyze project performance. 

Here, a time tracking chart forecasts when you’ll finish projects based on your estimates. Or, you can switch to the billing amount chart showing progress against the fixed fee amount set for the project.

2. Improved accuracy in project planning

When you track time accurately, you know how much each task takes. You create a record of task and project durations that can help you when you’re making time estimates for similar work. 

Some project managers create “guestimates” by guessing how much time and money a task should take, but we strongly advise against this approach.

You may risk planning fallacy, which is the tendency to underestimate the time needed to finish a task. 

You can estimate project timelines in many ways, using different estimation techniques depending on your needs. 

Add to this using time tracking software with historical time data, and you’re on your way to sharpening your estimates.

With Toggl Track, you can easily gather historical data and look at past data to estimate future projects.  This helped the public relations agency Revelations PR, Advertising & Social Media generate accurate estimates for prospective clients based on their previous projects and clients.

You need to:

1. Go to Projects.

2. Select the project you are interested in and see their time and cost.

You can also track your project’s progress after you’ve estimated it with Toggl Track’s Project Dashboard.

3. Easier conflict resolution

When you have the right data at your fingertips, solving client disputes is easier. You can even avoid such conflicts by providing time data reports as proof of work. 

You can choose between Summary, Detailed, or Weekly reports to share with clients in PDF, CSV, or XLSX format. 

You can use the Data Export page under Settings to export more detailed workspace data, such as projects, tasks, tags, subscription invoices, etc.

4. Better performance assessment

Project managers can use time tracking data to analyze employee performance accurately. 

How?

They compare how much each task takes with the outcomes achieved to identify high-performers. They can also use time tracking data to spot team members needing additional support or training. 

5. Better budget control

With higher visibility over how your team spends time, you gain more control over budgets. That’s because when you track time and project progress closely, you can spot inefficiencies and budget overruns as they occur. 

This timely insight means you can adjust resources and redirect efforts to prevent delays and money waste. 

The Billing Amounts feature helps you track project budgets on a visual chart. 

Time tracking benefits for team members

Team members benefit from time tracking in the following ways:

1. Better personal productivity

When team members track their time, they become more aware of their work habits and productivity levels. 

A better overview means they can change unproductive working habits by spotting distractions and inefficient tasks. This way they can deliver work faster and achieve better work-life balance. 

2. Evidence of work

Time tracking is especially beneficial for remote workers who may need to provide evidence of their work. This evidence supports performance reviews, client billing, and project delivery by offering transparent records of completed work. 

Toggl Track makes it easy to provide evidence of work through timesheets and reports. 

Team leads, and managers can review timesheets in Toggl Track to see how much time each team member has tracked. 

3. Improved accountability

When teams track their work hours, they are more focused and take more ownership of their tasks and deadlines. 

Why?

Knowing they must report time spent on projects can increase team members’ accountability and improve productivity by fostering a sense of responsibility and time management. 

It’s not about putting pressure on or monitoring them but rather about giving them better visibility into their work habits so they know where to improve. 

Toggl Track lets users manage time entries in the List and Calendar views to help with visibility and accountability. 

Admins and team members can choose to view time entries across organizations on a Calendar or in a List view. 

To see time entries in the Calendar view, select “Weekly calendar” or “Daily calendar” on the Timer page, as shown below. 

From this view, you can import external events from Google Calendar to ensure everything is in one place. 

You can conveniently drag and drop time entries to edit or readjust them in the Calendar view.

Toggl Track’s List view shows time entries across organizations in the web app. From this view, you can edit time entries, set them as billable, duplicate them, bulk edit, and more. 

4. Improved work-life balance

Team members who track their time consistently have a better idea of how they spend their time. 

If they spend too much time on work and not enough on their personal life, they have enough visibility to spot this imbalance. 

As a result, they can change their schedule to improve their work-life balance and avoid burnout. 

5. Better goal setting

When team members track their time, they have a better idea of how long each task takes. 

This insight helps them set realistic goals and organize their workflows to meet their objectives. 

Employers can use Toggl Track’s Reminder feature to ensure their team members don’t forget to track time. 

To set up a time tracking reminder in Toggl Track:

1. Go to Workspace Settings.
2. Select the Reminders tab, then click the “New Reminder” button in the top right corner. 
3. Add the target number of hours for your team members to track.
4. Click “Create Reminder”.

Who benefits from time tracking?

Let’s explore who gains the most from implementing time tracking:

• Freelancers: Freelancers juggle different projects and clients and usually charge by the hour. This makes it essential to track time accurately for precise invoicing, to avoid overcommitment, and to optimize productivity.
• Consultants: Consultants often need to provide detailed breakdowns of their workday to clients to justify their fees. Time tracking helps them be transparent and improve trust and client satisfaction. 
• Students: Students typically use time tracking to manage their study schedules and assignment deadlines. A time tracker also helps them prioritize their work time and improve their time management skills. 
• Team managers: Managers and team leaders use time tracking systems to monitor project progress and productivity. This helps them keep projects on track and within budget and spot productivity gaps early on.
• Small business owners: Time tracking helps business owners manage their team’s work hours, especially for remote teams. It also shows metrics for operational efficiency and business profitability. 

Lawyers: Lawyers rely on precise time tracking to bill clients accurately and keep their legal practices profitable. 

Time tracking benefits lawyers by providing billing transparency, reducing disputes over fees, and ensuring billing practice compliance.

In addition, it also helps them optimize their case workload

What’s the difference between time tracking and employee monitoring?

Time tracking involves recording how much time employees spend on tasks and projects.

Employee monitoring is a time tracking practice that involves app and URL tracking and taking employee screenshots or even camera pictures. 

The main differences between time tracking and employee monitoring are the following:

• Privacy: Time tracking respects employee privacy. It doesn’t track computer usage with screenshots and activity tracking features. Employee monitoring can be invasive, as it records websites visited and takes screenshots.
• Scope: The primary aim of time tracking is to understand how long tasks take and use this insight to improve productivity and bill clients accurately. 

Employee monitoring aims to control and micromanage employees, improving their performance and avoiding time theft. 

• Data collected: Businesses collect data on hours worked, completed tasks, and time spent on specific projects. 

Employee monitoring also gathers data like keystrokes, websites visited, or location information. 

Toggl Track doesn’t have employee monitoring features as Toggl doesn’t believe in employee surveillance and micromanagement. 

Employees don’t like being micromanaged, and activity monitoring can make them uncomfortable and damage trust. 

Here’s a quick view of how time tracking differs from employee monitoring:

Aspect	Time tracking	Employee monitoring
Method	Employees track time manually or automatically using software	Time tracking apps track computer activity and location and take screenshots
Focus	Records time spent on tasks and projects	Monitors overall employee activity and behavior
Benefits	Improves productivity, project planning, and billing	Helps meet performance and/or compliance standards

Start tracking time effortlessly with Toggl Track

Time tracking can work wonders for most teams and businesses when done right. 

To maximize the above benefits, you may want to use a time tracking tool like Toggl Track that can help you track time effortlessly and accurately and make the most of your time tracking data. 

Sign up for a free Toggl Track account

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• 10 Best Project Management Software With Time Tracking [2023]