Excel Time Tracking: How and When to Use It

Updated October 30, 2019

What’s a timesheet when you really think about it? A timesheet is essentially a spreadsheet where you enter your time worked, use those entries to calculate work hours, and use those total hours worked to calculate wages due.

When you're talking about entering data and running it through various formulas, what's the first tool that comes to mind?

If you thought of Microsoft Excel, the omnipresent spreadsheet tool that every business has likely used for countless office functions, then we're on the same page.

Excel is a great option for tracking employee time: It's fairly easy to use, and it's free, for the most part. However, the same can be said of many time clock solutions.

At a glance: How Excel time tracking for employee hours works

  • Excel is a great time-tracking option for small businesses or teams.
  • Time clock software is another great time-tracking tool, especially for larger teams with more complex needs.
  • Unless you have a good understanding of Excel formulas and spreadsheet functionality, you might find that using Excel can become complicated as your team expands.
  • Time clock software can simplify your time-tracking process as well as consolidate different processes (scheduling, attendance tracking, payroll calculations) into one tool.

What is Excel time tracking?

Tracking time in Excel is just one way to create digital records of employee hours worked. Using some basic formulas, you can track employee time on the job, vacation time, and payroll from one spreadsheet.

Microsoft offers several employee timesheet templates to guide you through the process of using Excel for time tracking. Based on whether you calculate payroll on a weekly, bi-weekly, or monthly basis, finding a template for time tracking in Excel is a quick Google search away.

Once your formulas are set up correctly, all you have to do is enter employee time into your spreadsheet. The formulas will do the work for you to calculate wages due and total hours worked.

However, Excel is just one of many time-tracking options. So, when should you use it, and when should you turn to other options to create your employee timesheets? We'll take a look at different situations and options below.

Is Excel time tracking for you?

Excel is a natural choice for tracking time for a few reasons. First, it's standard office software and likely came pre-installed on all of your employees' work computers.

Also, it's been around for so long, there are thousands of templates available for any of your time-tracking needs.

Even if you or your employees aren't Excel power users, the simple data entry and formulas needed to calculate hours for timesheets are fairly user-friendly.

However, while Excel might not be the right fit for every business, there are a few situations where tracking time in Excel makes perfect sense.

When tracking hours in Excel makes sense

Below are a few scenarios when you might choose Excel to track employee time.

  • Your business is very small: If you only have a handful of employees — or are self-employed — using Excel is a free and easy way to track time. Plus, with fewer users sharing a spreadsheet, there's less of a chance your file or formulas will become corrupted.
  • Your employee wages are easy to calculate: If your employees are paid at similar rates, your payroll calculations will be much easier to track in Excel. You won’t have to make many changes to customize formulas for each employee.
  • You have a small number of projects or clients to keep track of: If you bill clients or projects at different rates, you'll have to make more changes to your formulas. But if your client or project list is small — or all are billed similarly — your timesheet calculations will be relatively simple.

When to explore other methods of time tracking

If the above situations didn't resonate with you, it might be time to check out a tool other than Excel. Below are a few signs that employee time tracking in Excel might not be the right choice for you.

  • Your employees switch jobs or tasks often: If different types of work gets billed at different rates — and if your team members work on many different projects — keeping track of time in Excel will start to get difficult. The more variables you have to add into your formulas, the more chances there are for errors.
  • You have a large or growing team: Sharing files with large groups also increases your likelihood for errors. A tool with stricter configuration access might be a safer bet for calculating accurate payroll numbers.
  • You need to keep track of work and wage history for long periods of time: As your team or scope of work grows, you'll probably have to edit or overwrite the formulas you're using in Excel. Over time, keeping track of or recovering data over long periods of time can be difficult — and sometimes impossible — the more changes you make to your files.
  • You want to be absolutely sure you're not making errors: Even when you use a template, you'll still have to make changes to your Excel timesheet to customize it for your workplace. Just one error could result in underpaying or overpaying an employee, which could mean money lost for your company.

Time clock software, the Excel time-tracking alternative

If Excel sounded like a nightmare for your workplace, you'll be relieved to know there are many alternatives on the market. Time clock software is a great tool for tabulating employee hours and rolling them into your payroll system.

With time clock software, your employees can clock in and out to log hours, track time working on different projects or with different clients, and even request time off or sick leave. Since you'll have more control over user permissions, errors based on employee edits are less likely in a time clock solution.

Below, we'll take a look at a few of the benefits you'll see from choosing time clock software over Excel for tracking employee time.

1. Time clock software can replace other programs you're using Excel for

Many time clock solutions take care of a few main things:

  • Creating employee schedules
  • Tracking employee hours and PTO
  • Calculating labor budget or rolling data over to your payroll solution

So, in addition to tracking employee hours, time clock software can also help accomplish another painstaking task typically relegated to a spreadsheet: creating employee schedules.

By combining your scheduling, attendance, time tracking, and payroll tasks into one system, you'll spend less time sifting through the multiple spreadsheets you're currently using to keep track of all of these things.

2. It gives you more control over user permissions

We've all been through the confusion of who has editing access in a spreadsheet — or who needs access, or whose access needs to be changed.

Time clock software helps decrease this confusion. Administrators (typically a business owner or manager) have access to everything in the system. Employees, however, only have access to their own data.

Strict user controls decrease the chance of any of your team members accidentally modifying a formula or editing someone else's information.

3. It can give you more accurate numbers

When employees enter their time into an Excel spreadsheet, you're largely relying on the honor system and their memories. Especially if your team members frequently switch tasks during the workday, misremembering what they worked on and for how long is probably pretty common.

Time clock software gives you a tool that can track employee time down to the minute.

There are two different types of time clock software: scheduling and time tracking. With scheduling software, you can track exactly when your employees clock in and out of the office.

You can also restrict clocking in and out to an employees' scheduled hours. With time tracking software, employees can use a timer to track time spent on different projects. With the click of a button, they can record when they changed tasks or when they stopped working.

Whatever your time-tracking needs, time clock software is generally more accurate than the manual data entry required in Excel. And accurately tracked time also means accurately calculated work hours for your payroll budget.

4. Time clock software is less customizable

"Less customizable" sounds bad, but hear me out. With its blank spreadsheets and variety of available formulas, Excel is one of the most customizable tools ever. But are you an Excel wizard? Do you know exactly how you want to set up your employee timesheets? Do you know what a Pivot table is?

If you answered no to any of those questions, then customizing Excel to fit your time-tracking needs might be an overwhelming task.

Time clock software, on the other hand, will often guide you through system setup. You'll still be able to customize factors like employee salaries, overtime rules, and project rates; you just won't have to set up any of the formulas needed to calculate wages or project budgets.

Start saving time with time clock software

If the idea of configuring spreadsheets doesn't sound appealing to you, consider looking into some time clock software options.

And before you start protesting about the potential cost — Excel is generally free, after all — I have some good news: Many time clock solutions offer free or low-cost options, especially for small teams or businesses.

Check out some top-rated free and affordable time clock solutions:

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