What could you do with an extra $4,300? You could get a VIP pass to the World Business Forum’s Sydney conference—with flights. You could hire a developer to build you an entirely new website. Or you could sign up for a year-long team plan to SpyFu to get deep insights into your competitors’ web presence.

But where are you going to come up with $4,300? That’s a lot of money. It’s also the amount of money a business loses in a year from a single employee who wastes 40 minutes a day. That’s a $4,300 direct hit to your bottom line. From just one employee. And 40 minutes is below average.

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That money can help you grow your business, no matter what stage of development you’re in. Your bottom line is the golden indicator of the health of your business, and adding thousands of dollars to it is an opportunity you absolutely cannot afford to pass up.

Here’s how to get it.

Power up your workday Reach your goals faster with time tracking and work management. Get free demo

The secret to boosting your bottom line

If you want a more profitable business, there are two things you need to do: earn more and spend less. It’s not rocket science. But figuring out how to do both without making sacrifices can be tough. Fortunately, there’s an easy solution: time tracking.

It’s as simple as it sounds. So simple it’s almost ridiculous. All you need to do is have your employees keep track of the time they spend doing things. Spend four hours on a coding project? Log it. Spend 30 minutes responding to emails? Make sure there’s a record. That’s all there is to it. It doesn’t sound like it will make that much of a difference to your bottom line, but you might be surprised at just how effective it can be.

Let’s take a look at how tracking time can help you earn more and spend less.

Track time to increase earnings

Time tracking helps you know where to allocate your time, money, and personnel resources, which, in turn, maximizes the amount of money you’re making. In fact, it can lead to increased earnings in a number of ways. And when you increase earnings, you increase profits and growth.

Improve productivity

Long days at work make it difficult for people to concentrate. Minds start to wander, and time management goes out the window. Salary.com’s 2014 Wasting Time at Work Survey paints an alarming picture, with 89% of their respondents saying that they regularly wasted time at work. And 10% of respondents admitted to wasting at least three hours on a daily basis. That’s tens of thousands of dollars in lost productivity.

What are employees wasting so much time on? CareerBuilder asked employers about their employees’ most common productivity killers. Here are the top answers:

Cell phones/texting: 52 percent

Surfing the Internet: 44 percent

Office gossip: 37 percent

Social media: 36 percent

Email: 31 percent

Co-workers dropping by: 27 percent

Meeting: 26 percent

Smoke breaks/snack breaks: 27 percent

Noisy co-workers: 17 percent

Sitting in a cubicle: 10 percent

Decrease the time spent on these distractions, and you’ll add productive hours to the day.

Time tracking shows you what team members are working on, how much time each task takes, and which projects are going over their deadlines. This makes everyone on the team accountable for their actions and encourages workers to be more productive.

Depending on the survey, somewhere between 8% and 25% of employees have stated that they waste time because they lack incentives to work. Time tracking fixes that: when you know someone is monitoring your actions, you make better decisions. And that means you get more done.

Save time

When you’re wasting time, you’re not earning money. Every minute lost is money you’re not bringing in—which means saving time has an immediate effect on your earnings. Efficient use of time is crucial for optimizing your profits.

If you have two people working on the same task, for example, and one is taking twice as long as the other, you can figure out why. Maybe additional training is required to improve an employee’s skills, improve confidence, and speed up the workflow. Or if you see that a project is taking longer than expected, you may discover that not everyone is clear on the objectives and that a clearer explanation is required.

These types of time savings can make your team much more productive. And that means you’re earning more.

Accurately measure productivity

Every employee is unique. Some need a lot of communication. Some do their best work after lunch. Others focus on easy tasks first while tackling more complex issues later on. These differences in work styles makes it hard for managers to figure out who is performing and who isn’t. Time tracking cuts out these individual differences and allows you to objectively see how your entire team is performing.

Detailed productivity metrics show you how much an employee is working in a given day. For example, the Hubstaff codes activity levels in green, yellow or red and reports a percentage productivity value. You can also view screenshots taken throughout the day to see what people were working on.

A time tracking system simplifies the process of figuring out when things are working and when they’re not. It offers a visual representation of what people are working on, when they’re getting their work done, and when deadlines are being met. This all adds up to a better idea of individual workload levels.

By understanding not only how productive your employees are, but how they’re using their productive time, you can better allocate resources to meet your company’s goals. Detailed timesheets, tracking data, and screenshots let you identify places where employees are overworked, undertrained, or duplicating work. Eliminating these situations provides an immediate boost to your productivity—and your bottom line.

Track time to decrease spending

More motivation, efficient allocation of resources, and better tracking of productivity metrics help you earn more. But your bottom line isn’t just affected by earnings: it also takes into account how much you’re spending. Time tracking can help this side of the equation as well.

More accurate billing

An Accelo study on time tracking showed that employees who filled out daily timesheets were more accurate in recording their time than those who logged time weekly. Emails, calls, and other day-to-day activities are often billed inaccurately (or not at all), and relying on memory makes the process harder. A professional services firm that bills at $150 per hour, according to the study, would lose over $50,000 per employee every year due to poor time reporting—and that only takes time spent on email into account.

Removing memory from the equation saves employees time and results in more accurate billing, both for in-house and freelance workers. And knowing exactly how much time is being spent on a particular project means you can adjust hiring and contracting decisions on the fly to ensure you’re not over- or under-staffed.

Especially when you’re working with remote teams, feeling like you’re paying for an unknown quantity of work can be stressful. A contractor reports that they worked 25 hours this week—but did they really? With effective time tracking, you can be much more confident that you’re only paying for work that’s actually been accomplished.

Better management of remote teams

Whether you employ an in-house remote team or a cadre of freelancers, managing a team of employees across the country—or even the world—takes a lot of time and effort. Regular Skype calls or emails to find out the status of a project can take up hours of your week. Helping employees juggle numerous projects can be more difficult without regular meetings. Getting status updates takes longer than walking down the hall.

Effective time tracking shows you exactly where your remote employees are spending their time, giving you an accurate idea of where time and effort are being spent. If everything looks good, you can use a hands-off approach—and your employees will appreciate you letting them focus on their work. But if something needs to change, you can address it immediately to prevent additional wasted time.

Time tracking also increases transparency. If you have to talk with an employee about their sub-par productivity, you can point to their time tracking information as evidence that they’re not meeting their goals. And if you see a standout performer, they can similarly be awarded. Everything becomes more democratic and equal, which is great for organization morale.

By running a more efficient business, you can pass your savings onto your clients, especially if you work in an agency or a company that often charges by the hour. And by passing those savings on, you can offer more competitive prices. Which again helps you earn more.

Not sure that tracking time would save you money? Check out how OnlineSpecialists uses Hubstaff to save $22,000 every year.

Automate to save even more

Running a business is complex, and adding additional layers of tasks isn’t going to be a popular decision. You could ask your employees to keep track of every 15-minute block of the day in an Excel spreadsheet, but that would likely cost more time than it saves. And getting employee buy-in for that would be a nightmare. Fortunately, automated systems make the process almost completely hands-free.

An automated solution requires almost no work, reduces the chances of errors, can integrate with project management software, and reduces paperwork (which is good for everyone). Employees spend less time filling out timesheets, you spend less time processing them, and no training is required. It couldn’t be easier.

Fewer meetings, less time spent resolving tiny clerical errors, and the potential for more frequent paychecks will go over well with employees. Even if they’re unsure at first or feel like they’re being monitored too closely, the fact that you don’t need to hound them for updates or corrections will demonstrate the value of the process right away.

Start tracking time today

Whether you’re a small startup or a multinational corporation, time tracking gives a boost to your bottom line. By improving productivity, reducing costs, and requiring little investment or training, your company will be more efficient in no time. Less paperwork, less micro-managing, and more autonomy encourage employees to get more done. More accurate billing, better management of remote teams, and automation mean you spend less. It’s a no-brainer.

Do you encourage your employees to track their time? How has it impacted your bottom line?