28 Time-Tracking Best Practices and Tips

Time-tracking: best practices

Let’s go over the most effective ways to log time for streamlined workflows.

#1: Use a timer or timesheet

As some of the time-tracking best practices for teams and individuals, you can record time with:

• Timer — click Start to time your task and Stop when it’s done, or
• Timesheet — add time manually, including work hours and task description, for the whole week.

A versatile time tracker like Clockify offers both. Use the timer if you need precise metrics to:

• Increase productivity,
• Improve project estimates, and/or
• Track breaks and work distractions.

Alternatively, fill in timesheets to track time for compliance (like DCAA). This option also lets you:

• Review everyone’s work upon approval, and
• Ensure accountability by locking timesheets (or preventing past entry edits).

The best method will depend on your timekeeping goals.

CEO of a roofing company, Michael Feazel, recommends tracking time toward goals:

“Time-tracking should help measure impact and not only presence. It not only ‘tracks time,’ but it helps goals stay clear and better align outcomes.”

Free Time Tracker

Want versatile, flawless time-tracking? It‘s on the house! Time your work automatically or try digital ready-made timesheets - starting today!

Learn more Download

#2: Track time automatically or manually

Modern time trackers like Clockify offer 2 types of timers:

• Manual — enter your work time or start/stop the timer by hand, and
• Automatic — install the app and it will run in the background, monitoring visited sites and apps.

An automatic time tracker helps operations managers easily gain insights into everyone’s daily activities and reduce manual admin tasks and human error.

Meanwhile, manual time trackers require more hands-on supervision. However, they’re better suited for employees with fixed schedules and recurring projects.

As the image shows, manual timesheets offer you a clear view of everyone’s tracked hours per project over the week.

🎓 Free Online Timer & Stopwatch

#3: Try the 2-minute rule to simplify timekeeping

If not implemented properly, time-tracking can be a tedious task — which makes mistakes more likely. So, keep things simple with the 2-minute rule. If a task takes less than 2 minutes to complete, don’t document it.

For example, instruct workers not to track short bathroom breaks. Instead, they should be included in the total project time.

Heads up: The federal law doesn’t entitle employees to a paid break of over 20 minutes. So, track longer rest periods for accurate billing and payroll.

#4: Record non-billable activities

To promote a productive daily routine, you’ll need to monitor time spent on non-billable activities like:

• Research,
• Team meetings, or
• Communication via chat apps (like Pumble).

Top business bundle

Everything you need for well-oiled operations. Try our bold app suite for proactive time tracking, project planning, and team dialogue.

Learn more Download

Non-billable hours aren’t included in invoices, but are essential for calculating hourly rates. For example, you might charge a client for 100 hours of project work. But when you add the extra time spent on feedback and administration, the total hours increase — lowering your hourly rate.

Luckily, time-tracking tools help you track billable vs non-billable hours to predict project outcomes like:

• Time and budget estimates, and
• Hourly earnings.

🎓 Free Hourly Rate Calculator

#5: Use time trackers to organize project time

Among time-tracking best practices is categorizing time by project. To achieve this, pick a simple time tracker for personal and team use — like Clockify. Then, follow the steps below.

Step #1: Create distinct projects and divide them by:

• Departments,
• Clients,
• Processes, and
• Jobs.

Project names reflect your company’s main focus, so set up a standardized naming convention. Just remember that clients can have multiple projects, but a project can belong to only 1 client.

Step #2: Break down projects into tasks (or sub-projects) to add another level to your hierarchy. Tasks can:

• Indicate the activity type — like Coding or Design, or
• Describe the activity — like Design homepage or Write project proposal.

Step #3: Use tags (or labels) for even more control over your categorization. Tags aren’t tied to projects and add extra info to time entries for easier distinction.

To illustrate, you can apply the following tags to time entries regardless of the project:

• Special currency,
• Invoiced, and
• Overtime.

#6: Apply tags for focused reporting and invoicing

Besides using tags across projects, you can add multiple tags to a single time entry. As such, these “keywords” are especially practical in several ways.

Use case #1: Filtering reports

You can drill down report data by tags to see time on specific activities — like Overtime or Training — and uncover poor timekeeping habits among staff.

Use case #2: Client billing

When invoicing clients, you can group time entries by project and subgroup by tag. That way, your customers can see each project-related task and how much time it took.

Also, mark entries as Invoiced to dodge billing mistakes — like charging clients twice.

🎓 Simplify Billing and Automate Client Invoicing With Clockify

#7: Categorize time as you record it

One of the time-tracking best practices is to keep an organized time log from the get-go. Clear, structured timekeeping means:

• Clean time and budget reports,
• Time saved by reducing manual error, and
• Employees log time accurately and consistently.

To achieve this goal, use required fields to define the minimum information each time entry must contain. For example, set a rule that each entry must have a project attached.

🎓 How Clockify Transformed Team Time-Tracking Forever

#8: Leverage the time tracker’s extra features

Now that you’re a clock-in pro, explore extra settings to finetune your team’s time-tracking experience.

Extra feature #1: Idle detection

Are your employees often away from their desks or forget to stop the timer? A timekeeping app can detect idle time and let them erase it. This makes remote employee time-tracking more convenient.

So, if you ever wonder how to improve timesheet accuracy, idle detection is your answer — just remember to enable it in Clockify.

Extra feature #2: Reminders

Sometimes, idle detection isn’t enough to improve your team’s timer use. So, set reminders to alert employees when they haven’t tracked enough time via email or browser notification.

Extra feature #3: Bulk editing

As a project manager, you ensure that time data is squeaky-clean and up to date. So, if you notice any duplicate entries or inaccurate break times, simply:

• Select several entries for bulk editing, and
• Delete or alter entry details (like time period).

Time reporting: best practices

Next, let’s explore time-tracking best practices to get reliable and proactive time insights.

#9: List questions that time-tracking data should address

As an operations manager, you track time to spot inefficiencies and improve:

• Employee workflows,
• Time and budget spending,
• Client charging, and more.

To make the most of your time-tracking info, create an action plan with the following steps:

1. Draw questions focused on your main concerns, and
2. Provide answers based on your time data.

Here’s a Q&A example:

Q: What are we actually working on?

A: Run a summary report for the past 7 days every Friday. Then, group time by project and subgroup by task.

Q: How much should we bill customers?

A: To charge clients correctly, prepare an invoice with billable time entries related to their project. Use the time tracker to send or export invoices for safekeeping.

Q: How much should we pay each employee?

A: Set a cost rate for each employee to track their work hours (or labor costs) for payroll. Then, multiply their tracked time by their hourly rate to get the total pay.

Q: How do we pinpoint high-value projects and clients?

A: Open your summary report and group time entries by project and client to compare earnings and hours spent.

Q: How much time and money does it cost to complete a project?

A: See the project status for an archived project and the total tracked hours broken down by task.

Q: How accurate are our time estimates for each project?

A: Set estimates for each task and project. Then, compare the tracked vs. estimated time each week.

#10: Audit timesheets for data accuracy

If you don't enforce required fields, you’ll have to do regular timesheet audits to ensure error-free reports.

Why run a timesheet audit? To make sure every time entry is linked to the right project. After all, any mismatches or “rogue” time entries will mess up your reports.

In time-tracking apps like Clockify, you can use time audits to find entries:

• Without a project or task,
• With suspicious duration.

From there, you can edit entries by:

• Adding a project/task,
• Deleting the entry, or
• Changing the duration.

Sometimes, people start the timer by accident, but forget to delete the entry. To keep reports clean, locate and delete time entries that are shorter than 1 minute.

Additionally, you can check for entries that exceed 8 hours. If a team member spent 8 hours on a project, but only made one entry, ask them to split it into multiple task-specific entries for clarity.

🎓 How to minimize mistakes in timesheets

#11: Set hourly rates for steady profits

Whether you track individual or team time, you should define hourly rates to account for every billable minute and track resource use effectively.

Fun fact: Forbes reports that pricing per hour is especially beneficial for service businesses and freelancers — provided you add overhead and taxes to invoices.

To monitor profits and expenses hassle-free, you should set up your Clockify workspace with:

• Cost rates — amount paid to each employee for their labor, and
• Billable rates — amount charged to clients based on tracked billable time.

As employees log daily tasks, they can mark specific entries as billable to separate them from non-billable work. In Clockify’s reports, you can compare project costs and generated revenue. If your expenses outweigh your earnings, you should reprioritize your activities.

🎓 From Chaos to Clarity: How to Prioritize Tasks Properly

#12: Make project estimates and track project status

Estimate how long you'll need for a project. Then, see how much time it actually takes.

To monitor project progress, you’ll need to set KPIs (Key Performance Indicators) in your time tracker — which include:

• Time estimates, and
• Budget estimates.

Comparing predicted and tracked hours can also help managers gauge their staff’s utilization rate — the percentage of an employee’s time spent on client work.

With real-time data, you’ll get better at allocating resources and predicting project timelines.

#13: Round up time in reports

Using a timer can lead to needlessly precise time stamps – like 2:34:21. This makes report analysis visually demanding.

To solve this issue, round time to the nearest 15 minutes in reports. Then, all your ragged entries will appear neat and clean.

Legally speaking, managers can round employee hours to predefined time intervals like:

• 5 minutes,
• 6 minutes, or
• 15 minutes.

Time rounding is common in different industries. For instance, lawyers bill clients in increments of an hour, such as:

• 6 minutes (the industry standard),
• 15 minutes, or
• 30 minutes.

For instance, a 2-minute call will get rounded up to 6 minutes.

Additionally, healthcare facilities use time rounding for payroll. Legally, they must round employee hours fairly — 1–7 minutes can be rounded down, but 8–14 minutes must be rounded up.

🎓 Career Burnout in Healthcare Is High. Better Time Management Helps

Team adoption and compliance: best practices

Now let’s go over the practices that help you implement time-tracking without resistance, build the habit, and maintain high compliance.

#14: Start with a pilot program in one department

Rolling out time-tracking company-wide on day one creates chaos and concern. The best approach for employee time-tracking would be to test it with just one team first.

Pick a department that’s small enough to manage and run the pilot program for 3-4 weeks. During this time:

• Test your timekeeping software and workflows,
• Identify friction points before they affect everyone, and
• Gather feedback and adjust the process.

Once the pilot team has a functional working process, document what you learned and gradually roll it out to other departments.

#15: Keep the data entry as simple as possible

Every extra data field you require increases friction and kills compliance. Consider the following as your essential data entries:

• Project,
• Task,
• Date, and
• Duration.

And if you’re absolutely certain you’ll actually use them, add these:

• Tags (if you want to further filter reports), and
• Description (if clients require itemized invoices).

Most time entries don’t need a description. The project and task already tell you what happened. After all, the easier tracking is for your employees, the more accurate your data becomes.

#16: Communicate WHY people need to track time

People resist time-tracking when it feels like surveillance or busywork. This is precisely why explaining the actual purpose upfront is one of the time-tracking best practices.

When people understand why they need to do something, their pliancy and engagement increase compared to when they’re just told to do it.

🎓 Free time management calculators

#17: Don’t force people to use the timer

Timers can feel intrusive. For some employees, timers interrupt the flow, making them feel anxious about “performing.” Let people choose how to track time:

• Use a timer if they like precision, or
• Enter time manually at the end of the day if they prefer it.

Manual entry often produces more accurate data because:

• People don’t leave timers running during breaks,
• They allocate time to the right projects instead of whatever timer is running,
• They’re less stressed about perfect tracking, etc.

The goal is accurate data, not perfect data, which leads us to our next point.

#18: Aim for accuracy, not perfection

Demanding precision down to the minute burns people out and can badly affect the adoption of time-tracking.

You don’t need to know that someone worked exactly 2 hours, 34 minutes, and 12 seconds. You need to know it was roughly 2.5 hours. This gives you:

• Reliable project cost estimates,
• Fair client billing, and
• Useful resource allocation data

— without:

• Stress about tracking even bathroom breaks, and
• Data that’s precise but often wrong.

When choosing between precision (70% chance that 2:34:12 tracked is real) vs accuracy (99% chance that 2h±30min tracked is real), accuracy is always better.

🎓 Decimal Hours Converter

#19: Track daily, not weekly

Wondering how to improve timesheet accuracy without obsessing over extremely precise time data? It’s simple — track time daily instead of weekly.

Filling timesheets at the end of the week feels less frequent, so they seem easier — but they’re not.

Here’s what actually happens with weekly entry:

• Friday afternoon arrives,
• An employee spends 45 minutes trying to remember what they’ve done since Monday morning,
• They guesstimate or copy-paste the same entries, and
• Data quality drops.

On the other hand, daily entry takes 2-3 minutes at the end of each workday. Memory’s fresh, and everyone knows what they’ve worked on. While it may seem like more work at first, daily tracking produces better data with less effort.

#20: Assign someone to check timesheets every single day

When you first introduce time-tracking, the process will be spotty. People will regularly forget to fill out their timesheets, or they’ll wait too long and get frustrated.

So, put someone in charge of checking timesheets and reminding people to fill them before they leave work. It doesn't have to be a manager; anyone can do it.

You can even automate the process (in case everyone’s too nice/shy). Time-tracking software can send regular reminders to track time if someone hasn’t logged a targeted number of hours — just set the rules for who gets them and when.

Management and administration: best practices

For time-tracking best practices, you need to keep data clean, organized, and useful in the long term. The following tips can help you with that.

#21: Make time-tracking data visible (with boundaries)

Should everyone see everyone else’s tracked time? Generally, yes — with some limits.

As one of time-tracking best practices for teams, transparency helps because:

• People see that tracking is normal and widely used,
• It creates social accountability (no one wants to be the only person with empty timesheets), and
• It builds trust since nothing’s hidden or used against employees.

Give team members access to project-level data and lock down any personal or legally protected information. This balance keeps the process transparent without oversharing.

If the team is competitive, you can even enable the team dashboard so people can see who tracked the most time. A little bit of competition is a good thing, as long as there’s no extrinsic reward.

#22: Never tie time data to performance reviews

The fastest way to destroy accurate time-tracking is to use it to judge people. Yes, time data helps you evaluate:

• How the organization is performing,
• Whether projects are profitable, and
• How much you should charge clients and pay employees.

However, time data shouldn't be used to assess work quality or employee performance, as it can have serious negative consequences.

When you equate tracked hours to employee performance, the whole team’s more likely to:

• Inflate hours to look busy,
• Underreport time on difficult tasks to seem efficient, and
• Manipulate the system rather than track honestly.

If someone’s hours seem unusual, treat it as a conversation starter, not evidence. This way, you can learn the why behind the numbers, gain trust, and improve your business processes.

🎓 How to Track Employee Performance (+ Free Templates)

#23: Limit project access to reduce clutter and confusion

When your project list has 200 active items, people waste time scrolling and searching. That said, consider the following solutions to cut the noise:

• Assign people to projects so they only see their own,
• Let people mark their most used projects as favorites so they appear first,
• Archive completed projects so they don’t clutter active lists, and
• Mark finished tasks as done to keep the project task list clean.

This requires a bit of admin work upfront, but it saves your team hours.

Also, when in doubt, grant access. Making someone request and wait for permission wastes more time than occasionally seeing an irrelevant project.

For large organizations, consider creating separate workspaces by department, so teams aren’t drowning in other department’s projects.

Team time management app

Free time management app for teams. Track work hours with one click and see who works on what.

Learn more Download

#24: Balance accountability and trust with thoughtful monitoring

Time-tracking creates accountability, but how much oversight is too much? The answer depends on your business model, team structure, and what you’re actually trying to measure.

Regular time-tracking works for most teams and allows managers to:

• Track hours and project allocation,
• Review timesheets for completeness,
• Monitor project budget and utilization rate, and
• Have conversations when patterns seem unusual.

However, enhanced monitoring may fit specific situations, such as:

• Remote employee time-tracking,
• Client contracts requiring proof of work,
• Compliance-heavy industries (e.g., government contractors, legal),
• High-turnover environments with temporary workers, and
• Billing models where clients expect detailed activity logs.

🎓 How to Track Employee Time Without Invading Privacy

If you want to use employee monitoring software, do it properly — and here’s how:

#1: Be transparent about what you’re tracking and don’t hide monitoring. Tell people exactly what data you’re collecting and why.

#2: Focus on patterns, not “gotcha” moments. Use data to spot systemic issues (e.g., someone consistently being offline during work hours) rather than nitpick individual instances (e.g., someone taking a 5-minute longer break).

#3: Distinguish between accountability and productivity measurement. Monitoring can verify that someone’s working, but it can’t measure whether they’re working well. Quality, creativity, and problem-solving don’t show up in activity logs.

#4: Give people autonomy within boundaries. Set clear expectations (e.g., available during core hours) but don’t micromanage every minute.

#5: Review whether monitoring is actually helping you make better decisions — or just collecting data that creates anxiety without improving outcomes.

As Daniel Kroytor, CEO at a payment solutions company, explains, the best time-tracking practice for teams is to introduce it as help, instead of a way to spy on employees:

“I tell my team that the end goal is to establish how long something takes so we can bill more accurately and protect our time.”

#25: Lock timesheets for previous months to avoid misunderstandings

Everyone should be able to change their time entries. This flexibility is better than requiring people to:

• Ask for approvals when all they want to do is fix a typo,
• Attach a missing tag, or
• Add a minute to make the entry nice and round.

However, this flexibility shouldn’t last forever. That said, locking timesheets after a certain period is necessary so that you can safely send the report to the client or payroll, knowing it won't change again.

More importantly, people will know that there's a cut-off period and that they should get their timesheets in order.

Misunderstandings often occur when a worker fixes a miscategorized time entry, and later the accounting team can't figure out why a project is missing 7 hours.

#26: Name projects consistently

Random project names create chaos in reports and slow down time entry.

If you don't have a standardized naming convention, people will waste a lot of time searching for them and thinking about how to categorize their entries. The goal is to organize items in a recognizable hierarchy so that categorizing time entries is fast and easy.

For instance, a good practice is to use a standard format such as: [Client/Department] — [Project Name].

Ideally, have your admins create standardized projects so that the rest of the team can track their tasks by:

• Writing the description of the task, and
• Allocating it to the correct pre-existing project.

See an example in Clockify below.

All you have to do to track time on projects in Clockify is:

• Write what you’re working on in the description box,
• Click the Project button,
• Choose your project from the drop-down menu that admins created, and
• Add the time you spent on it and click the Add button if you’re tracking manually, or
• Start and stop the timer for the duration of your work.

To switch between manual entry and timer, simply click on the right icon, like so:

If you’re using timesheets, go to the Timesheet tab, click the Select Project button to choose your project, and fill in the time in timesheets — as shown in the image below.

#27: Document your entire time-tracking process

Once your system works, write it down. Your time-tracking guide should cover:

• What to track,
• How to track,
• When to submit, and
• Who monitors compliance.

Naturally, you can add the FAQs section to answer other potential questions.

Update the document quarterly as your process evolves. Treat it as a living resource, not a static policy that no one reads.

When questions come up repeatedly, add the answers to this guide. Over time, this document will become a self-serve support that reduces the need for constant clarification requests. And you can use the guide during onboarding so that new hires understand expectations from day one.

#28: Turn tracked time into decisions, not just data

Tracking hours is pointless if you never look at what they’re telling you.

Most teams generate reports, glance at the totals, and then ignore them. Meanwhile, the same problems keep happening — projects going over budget, clients draining resources, etc.

That said, stop just collecting data — start using it. In other words, calculate a few key metrics every month:

• Utilization rate (billable hours + total hours tracked) shows what percentage of time generates revenue.
• Project profitability tells you whether a particular project makes or loses money after accounting for time costs.
• Accuracy of your estimates points out where and for how much you’re under- or over-estimating your quotes.
• Budget burn rate reveals whether you’re spending your budget too fast so that you can timely adjust the scope or speed.

Look for patterns rather than one-time numbers, and then act on what you find.

Example: Your data shows that Project X is 40% over budget with 2 weeks left to complete it. Don’t just note it — meet with the team, figure out why this is, and adjust the scope or resources before you lose more money.

Time-tracking data only matters when it changes your decisions.

🎓 Employee Time Management Guide for Efficient Teams

Start tracking time the right way — with Clockify

Time-tracking doesn’t have to be painful. When you do it properly, by taking time-tracking best practices for teams into account, it becomes a simple habit that makes your business run better.

As a powerful, no-nonsense time tracker, Clockify by CAKE.com helps teams track time without the friction. You can count on:

• Flexible data entry — use timers or fill timesheets manually, whatever works for your team.
• Simple categorization — projects, tasks, and tags keep data organized without added complexity.
• Automated reminders — never chase people for missing timesheets again.
• Reports that answer real questions — see profitability, budget status, where time actually goes, and more.

Even better, you and your dev team can further customize Clockify by creating whatever add-ons you might need. Check out our CAKE.com Marketplace and currently available add-ons.

For any questions, contact our fully human customer support, available 24/7.