Top 7 Best Reasons Why Time Tracking is Crucial

Time is money. People who espouse this principle are also advocates of time tracking. They consider the activity of tracking time essential in business, the very component that keeps a company existing. It is as important as and sensitively linked to other business processes like payroll, accounting, or project management.

It is true that time tracking enables a business to charge a customer by the hour, but it provides more than that. It is necessary in understanding how a person, or organization, spends its time, for example, in projects. It is key in knowing whether the project is profitable or not, on track or missing its targets, and if the team is speeding through or crawling to a halt.

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7 Reasons to Implement Time Tracking

Time tracking gives several benefits whether implemented personally or for the organization. It can indicate productivity, can provide insight, and can signal a healthy workflow. Here are seven reasons why doing time tracking is a good business practice.

1. To bill clients

Time tracking is essential for billing clients by the hour. It is imperative to track the actual time than just to guess how much was spent. If a team, for instance, underestimated how long it took for them to complete a project, they could have spent much effort for very little compensation.

On the other hand, if they overcharged their client, it may damage the relationship and never get another order again. Some time tracking tools, like Harvest, automatically pulls billable time and generate invoices, minimizing manual work.

2. To keep projects profitable

In any client services business, time tracking is important, whether charging by the hour or in other ways. Since a project is composed of a number of hours, every hour represents a cost. The cost can be based on the rate of the people doing the actual work.

To be profitable, the total price being charged to the client should be greater than the cost of completing the project. To figure out the cost, we must figure out the exact number of hours, and the way to do that is through time tracking.

3. To improve pricing

When a business is starting, pricing a project involves a great amount of estimating and guesswork. It is a difficult balancing act to come up with a price that is competitive enough to attract clients, but also profitable enough to help the company survive. Time tracking provides a more reliable method than guess-timating.

It allows the company to build a library of past projects that they can use as reference. These historical references are crucial in refining the pricing of a particular project, because the team is now in a better position based on past experiences.

4. To make more accurate estimates

The library of past projects is also a handy reference for estimating the duration of an upcoming project. It can help avoid over-promising to the client, then miss the deadline. Knowing how long a particular project will be completed enables project managers to plan better.

They can plan the team’s time and staff the project with adequate members. Over-booking is avoided, for any team member, and also for the company. This means staff have enough time to work on their projects, and the company accepts only the right projects they can properly work on.

5. To manage the team better

Time tracking allows the company to review the amount of work their team is taking on. They can look at individual team members, and even entire teams, and check if they are doing just enough or if they are dangerously burning themselves out.

Actual timesheet data can be used by a team leader or project manager as supporting document either to refuse more work or justify additional resources. Team members will also adopt time tracking wholeheartedly if they know it is used to help them maintain a healthy work-life balance and keep them motivated.

6. To create a record of work

Aside from improving the aspects of pricing and estimating, time tracking records are useful when clients ask for more explanation or details. Some clients can ask for a breakdown of the tasks they paid for or will be paying for. In this situation, having timesheet data allows the company to simply generate a report with all the details included.

It is a supporting document to help explain how much work the project actually took. This is important during an audit or when taking on government projects. The report can also justify the need to refuse unreasonable requests or expectations.

7. To improve how one works

Without actual, measured data, it is difficult to be objective in how much one is productive. Many times, teams and team members are surprised in what the data shows. The good thing is that whatever the data reveals, this can be the basis for improvements.

Actual time tracked can show where the time goes, whether on too many meetings, or on time-consuming internal processes. Time tracking can help teams and organizations to streamline their processes and workflow. It can also help individuals make small improvements that result in big impact cumulatively and qualitatively.


Time tracking initially is adopted by businesses to primarily solve hourly billing. But today’s time tracking tools can do much more for their business. It is key in making more informed decisions regarding project pricing, estimating, team scheduling, and even personal productivity.

Once the inertial resistance to employee time tracking has been overcome, the staff, and the company as a whole, will see the major benefits it can provide.

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