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Businesses must track the time and resources spent on different projects in order to calculate the return on investment as well as track operational efficiency. Tracking employee time spent on a project also helps managers plan create schedules, manage timesheets, bill clients, and allocate resources.
Many small businesses record time and expenses manually, making record sharing between departments difficult. Manual methods are also more prone to error and more time-consuming.
Time and expense software automates the recording of time spent on projects, billing clients at different rates, tracking project progress, and sharing records with other departments such as HR, payroll, or accounting. It also helps users avoid discrepancies in records.
The market offers many best-of-breed as well as integrated time and expense management software options. This can make choosing the software best suited to you difficult. In this Buyers Guide, we discuss core features and other considerations to keep in mind when purchasing a time and expense software.
Here's what we'll cover:
Time and expense software is a tool with which employees can record work hours and expenses and track project statuses. It offers timesheets, calendars, absence recording systems, expense sheets, and reporting capabilities to help managers gain visibility into and control over projects.
Advanced time and expense software tools also offer additional features such as invoicing and expense approvals. Some time and expense software also integrates with other systems such as HR, accounting, and project management to streamline your entire business operation.
Recording time and expenses is an important function not just for project managers, but also for HR executives, accountants, inventory managers, and procurement teams.
Time and expense tracking is therefore a functionality required across departments. Based on the provided capabilities, time and expense software can be divided into two categories.
Stand-alone, or simple apps: These are the solutions that offer only time tracking and expense reporting features. Even within this category, some apps may offer either time tracking or expense management features. The basic features offered by stand-alone time and expense software include time tracking, expense tracking, and reporting.
Comprehensive or integrated solutions: Many HR, project management, work management, and accounting software suites offer time and expense management capabilities built in.
There are several free and open source time and expense management software options available on the market. If you're just starting out and want to check how time and expense tools can help, signing up for free versions or free trials will be a good option.
Key question to ask a vendor before you buy: Is your time and expense management solution a stand-alone tool or a part of a comprehensive suite?
Similar to most other software solutions available today, time and expense solutions also can either be on-premise or cloud-based.
GetApp focuses on software-as-a-service (SaaS) or cloud-based software solutions, as these are more suitable for small businesses mainly due to the cost versus value factor. We discuss the benefits and challenges of both the deployment options in more detail below.
Higher upfront investment and more complex set-up processes.
Installing updates provided by the vendor is your responsibility and may require additional hardware investments.
Software is hosted on your own server, improving your control over data.
All features come covered in a single license.
The subscription-based pricing model lowers upfront costs significantly but adds to your operational expenses.
Regular updates and upgrades are available from and handled by the vendor.
Your time and expense records are accessible from anywhere you have an internet connection.
It's easily scalable—you can add more employees and projects to the tool as your business grows.
Key questions to ask a vendor before you buy: How frequently do you offer software updates?
Understanding different features can help you shortlist the right software suited to your business.
The key time and expense software features to look out for include:
Punch-clock/manual time entry: This feature forms the basis of the software's time tracking capability. It captures the time employees spend on projects by allowing them to electronically clock-in and clock-out using punch cards, magnetic readers, automated start/stop features on computer systems, etc.
Time clock feature in CoConstruct
Expense management: Capture the cost of different materials, tools, accessories, etc. and attribute them to specific projects or as general expenses. Manage recurring expenses by auto-creating records for them.
Expense tracking in Expensify
Notifications/reminders: Get email and text reminders and notifications about pending tasks, bills, receipts, employee absences, etc. so that you can plan your project workloads and expenses accordingly.
Notes and notifications feature in FreshBooks
Reporting: Reports and dashboards provide managers with an overall view of how a project is progressing. It shows which employees are working on which projects as well as identifies projects nearing completion or requiring additional resources.
Reports generated in FreshBooks
Resource allocation and planning: Analyze resources' bandwidth to plan and distribute projects based on availability, workload, and skill set requirements.
Dashboard in Workfront highlighting what different employees are working on
Project tracking: Track the completion, expenses, and revenue of different projects.
Project tracking feature in Workfront
Key questions to ask a vendor before you buy: What are the features provided in your product's basic version? Are there any additional features, and how are they priced?
Integration with other software tools allows for seamless transfer of data between the different applications you use.
Some of the common integrations to look out for include:
HR/payroll software: Your payroll or HR software will require the time spent by employees on different projects along with their respective billable rates to process paychecks/salaries. Integration between these two tools will help export/import this data easily.
Accounting software: Integrating with accounting software will allow the automatic transfer of revenue and expense details of every project between the tools.
Project management software: If you use project management software to track projects and collaborate with stakeholders, it's important for your time and expense software to integrate with it to avoid conflicts and errors in resource allocation, project planning, etc.
Invoicing software: Integrating your expense tracking software with invoicing tools can help automate the creation of client bills, material procurement bills, etc.
Customer relationship software: Integration with CRM solutions allows your time and expense software to automatically capture client details for every project. It lets you add different deadlines, billable rates, and other custom requests to each project or task.
Inventory management: Resource planning features in time and expense software help analyze consumption of material resources. This information when sent to inventory management tools helps to maintain desired stock levels and procure new materials when needed.
Key question to ask a vendor before you buy: Do you offer free APIs or plan to expand on the integrations offered in the future?
The use of artificial intelligence (AI) in time and expense solutions is helping make them more robust. AI-powered time and expense software can automatically detect, verify, and approve funds and reimbursements. Machine learning technologies are helping these tools analyze patterns and detect expense or time frauds.
Key question to ask a vendor before you buy: Do you already offer or plan to add AI capabilities to your tool?
Note: The applications selected in this article are examples to show a feature in context, and are not intended as endorsements or recommendations, obtained from sources believed to be reliable at the time of publication.