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Construction companies are overpaying payroll to the tune of $7 billion annually, and that’s a conservative estimate. If each of the 700,000 American businesses in the construction industry manages to lose just $10,000 over the course of a year, the industry already reached that number—and some are losing much more.

Where are these massive figures coming from? For owners, the truth is as obvious as it is frustrating: The vast majority of those losses are a result of incorrect time reporting.

This occurs up and down the chain of command. Employees report time incorrectly, supervisors make mistakes when submitting time cards at the end of the week, and payroll and HR managers make typos when doing tedious data entry.

Misreporting is done accidentally more often than it’s done maliciously (although both are a reality), but in either case, the errors don’t need to be large to create problems. In fact, it’s the other way around. Big errors tend to be caught and fixed, while smaller ones slip through unnoticed. Add enough of them together, and payroll can easily be inflated by thousands of dollars per month for each employee.

Most company owners see individual employee time cards as the biggest issue, and common sense supports that argument. An employee who clocks in four minutes before starting work, takes an extra four minutes at lunch, and waits until four minutes after quitting to clock out—and does that every day—costs the employer four hours of unproductive pay per month. Factor in overtime, workers’ comp and multiple employees doing it at the same company, and you start to get a sense of why there’s a cash leak in the payroll department.

For small companies with limited oversight in the field, it’s virtually impossible to combat this problem. And even for the most honest of employees, keeping track of their activity over the course of a week so that they can fill out a paper timesheet at the end of it is a recipe for making mistakes.

A Simple Solution

It doesn’t have to be this way. While some companies are still bleeding cash, others are leveraging technology that provides a complete trail of every employee’s location, activity and production throughout each day.

The average smartphone is packed with robust technology that can record, compile, and transmit the data needed to ensure accurate time cards while still allowing the user to maintain as much privacy as he or she wants. Meanwhile, the best apps are incredibly easy to navigate and customize and are designed with enough intelligence to actually surface and predict possible errors or discrepancies. Most importantly, they’re built around next-gen GPS, which provides location data that provides the accuracy contractors need to have confidence their payroll is accurate.

By leaning into technology and embracing the right tools, construction companies can drastically reduce the amount of payroll error that’s occurring now. In the future, this shift toward digital solutions will not only strengthen the bottom line of individual companies but also impact the entire industry, creating better outcomes for owners and employees.

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