Most companies do not fully appreciate the losses incurred due to poor time and attendance record keeping . Manual and paper-based timesheets rely heavily on human intervention, making them difficult to manage at scale and vulnerable to small errors that compound over time.
How much payroll leakage comes from manual timesheets?
For most businesses, payroll leakage caused by manual timesheets typically ranges from 3–8% of total wages. These losses rarely appear as a single obvious mistake. Instead, they accumulate quietly through rounding errors, missed breaks, late approvals, and rework during payroll processing.
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What is payroll leakage?
Payroll leakage refers to wages paid incorrectly or unnecessarily due to process gaps, inaccurate time capture, or administrative inefficiencies. In businesses using manual timesheets, these losses are often accepted as “normal” because no single error appears significant on its own.
Small timesheet inaccuracies repeated across every pay run can result in tens of thousands of dollars in avoidable wage costs each year, particularly for businesses with 20 or more employees.
– Blake Smith , Marketing Manager, ClockOn
Over time, however, these small discrepancies become embedded in weekly payroll routines and are rarely revisited unless a formal audit takes place.
Common causes of payroll leakage from manual timesheets
Manual time recording introduces multiple risk points across the payroll workflow. Common contributors include:
- Rounding up start and finish times
- Missed or incorrectly recorded meal breaks
- Late or reconstructed timesheet submissions
- Manager approvals without detailed verification
- Early clock-ins, late clock-outs, and unrecorded absences
- Manual re-entry of timesheet data into payroll systems
Research and industry observations suggest that time misappropriation for breaks, late arrivals, and early departures alone may account for up to 4% of payroll value in some workplaces.
Why small timesheet errors turn into large annual losses
A few extra minutes per shift may seem insignificant, but when multiplied across dozens of employees and 52 pay runs per year, the financial impact escalates quickly. Because these costs are distributed evenly across payroll, they are rarely flagged as anomalies.
Once approved, payroll teams must convert raw timesheets into payable wages , a process that is labour intensive and highly sensitive to data accuracy.
Estimating payroll leakage in your business
The calculator below helps estimate how much payroll leakage may be occurring in your business based on employee numbers, pay rates, and typical timesheet discrepancies. It is designed to provide a conservative indication of cost rather than a worst-case scenario.
The estimate does not include compliance penalties, back-pay risk, or the administrative time required to resolve payroll disputes.
Manual Timesheet Payroll Leakage Calculator
Use the calculator below to estimate how much your current time and attendance process may be costing your business each week and annually.
Manual timesheets vs automated time and attendance
Modern time and attendance systems reduce payroll leakage by capturing work and break times automatically, creating a reliable audit trail and reducing manual intervention.
Options include biometric terminals , mobile time tracking via the ClockOn GO Mobile App , or employee self-service through the Employee Web Portal .
See if ClockOn is right for your business
