How Does Time Tracking Software Work (2024 Ultimate Guide)

How Does Time Tracking Software Work (2024 Ultimate Guide)

Bojan Radojičić
May 30, 2023

Time tracking software refers to a type of tool or application that enables individuals or organizations to accurately record and monitor the time spent on various tasks, projects, or activities.

It typically includes features such as timers, project management capabilities, reporting functions, and integrations with other tools, allowing users to track and analyze their time usage for improved productivity and efficiency.

By efficiently planning and organizing workloads, employees can maximize productivity, avoid procrastination, and accomplish more within the available time.

Effective time management ensures that important tasks are completed on schedule, reduces stress, and improves overall efficiency and performance.

It helps individuals maintain focus, make informed decisions, and achieve their professional goals.

The purpose of this article is to provide a comprehensive explanation of how time tracking software operates and functions.

time tracking software

Understanding Time Tracking Software

What are the key features of time tracking app

Time Tracking: The ability to track and record time spent on various tasks and projects, either manually or automatically.

Project and Task Management: Features for creating, organizing, and managing projects and tasks, assigning them to team members, setting deadlines, and tracking progress.

Reporting and Analytics: Generating reports and analytics that provide insights into time allocation, productivity, and efficiency, helping users make data-driven decisions.

Timesheet Management: Managing and maintaining timesheets, including editing and adjusting time entries, tracking billable and non-billable hours, and categorizing time spent on different activities.

Integrations: Seamless integration with other tools and software, such as project management systems, communication platforms, and accounting software, to streamline workflows and data synchronization.

Mobile Accessibility: Availability of mobile apps or responsive design, allowing users to track time and access features on-the-go using smartphones or tablets.

Reminders and Notifications: Alerts and reminders for tasks, deadlines, and time tracking, ensuring users stay on top of their schedules and commitments.

What are the key types of time tracking software?

The key types of time tracking software include:

Manual Time Tracking: These software solutions rely on users manually entering their time worked or logging their activities.

Users input the start and end times for tasks or record the time spent on different activities.

Timer-Based Time Tracking: Timer-based software allows users to start and stop timers to track the time spent on specific tasks or projects.

It provides real-time tracking and captures accurate duration for each activity.

time tracking software-my timers

Screen Recording: This type of time tracking software records the user’s screen activity, capturing the applications, websites, or documents they work on. It provides visual evidence of time spent on various tasks.

Automatic Time Tracking: These applications use algorithms and artificial intelligence to automatically track the time users spend on different activities by monitoring their computer usage, active applications, and mouse/keyboard movements.

Web and App Time Tracking: This software tracks the time spent on websites and applications. It can categorize time by individual websites or apps and provide insights into how much time is spent on each.

Project Management Integrated Time Tracking: Time tracking software integrated with project management tools allows users to track time directly within the project management interface.

It provides seamless integration between time tracking and project/task management.

Mobile Time Tracking: Mobile time tracking apps enable users to track their time on smartphones or tablets. They offer flexibility for users who work remotely or are frequently on the move.

Employee Monitoring: This software not only tracks time but also monitors employees’ activities, including websites visited, keystrokes, and screenshots. It focuses on tracking employee productivity and can be used for performance evaluations and ensuring compliance.

Core Components of Time Tracking Software

Time tracking functionality

Manual vs. automatic time tracking

Manual time tracking involves users manually entering their time spent on tasks or activities. This can be done by logging start and end times, recording time intervals, or entering specific durations. Users are responsible for accurately tracking and recording their time, which requires discipline and diligence. Manual time tracking provides flexibility and allows users to have more control over their time entries.

In the other side, automatic time tracking involves software or tools that automatically track and record time without the need for manual input from the user.

This can be done through various methods, such as monitoring computer usage, tracking active applications, or analyzing mouse and keyboard activity. Automatic time tracking is quite controversial due to privacy concerns. Simply, nobody what to be tracked.

time tracking-timer

Factors to Consider

Accuracy: Manual time tracking relies on users to accurately record their time, while automatic time tracking captures time data automatically, reducing the chances of errors or omissions.

Effort: Manual time tracking requires users to actively track and enter their time, which can be time-consuming and may lead to inconsistencies.

Automatic time tracking, on the other hand, requires minimal effort from users as it runs in the background and captures time automatically.

Privacy: Manual time tracking gives users more control over their data as they manually enter and manage their time entries.

Automatic time tracking may involve monitoring computer usage or activity, which can raise privacy concerns. It’s important to choose software that respects user privacy and provides transparent data handling practices.

Real-time Tracking: Automatic time tracking allows for real-time tracking, capturing time spent on tasks as they happen.

Manual time tracking may have delays, as users need to actively log their time entries after completing a task.

Flexibility: Manual time tracking offers more flexibility in tracking time for activities that may not involve computer usage, such as meetings, phone calls, or offline tasks.

Automatic time tracking may not capture these non-computer activities accurately.

Ultimately, the choice between manual and automatic time tracking depends on personal preference, the nature of the work being tracked, and the level of accuracy and convenience desired.

Some individuals may prefer the control and flexibility of manual time tracking, while others may find automatic time tracking more convenient and less prone to errors.

Time tracking per different categories

The purpose of time tracking is different depending on the user and preferences. For example, consultants want to track time per client, while sportsmen want to track time per activity.

These are the usual time tracking categories:

Clients: This category allows users to track time spent on different clients or customers. It helps businesses accurately allocate billable hours and provides insights into client-specific workloads and profitability.

Projects: Tracking time by projects enables users to monitor the time spent on specific initiatives or assignments. It helps in tracking project progress, assessing project profitability, and ensuring that projects are completed within the allocated time.

Tasks: Task-based time tracking involves breaking down work into smaller tasks and tracking the time spent on each task. It provides a detailed view of time allocation, helps in prioritizing tasks, and identifies time-consuming activities.

Activities/Categories: This category allows users to track time based on specific activities or categories. It can include general activities like meetings, administrative work, research, or specific categories related to the nature of the work or industry.

time tracking

Tracking billable and non-billable hours

Client Invoicing

For businesses that charge clients based on time worked, tracking billable hours accurately is crucial for generating accurate invoices.

It ensures that clients are billed correctly for the services rendered, maintaining transparency and trust in the client-provider relationship.

Revenue Generation

Tracking billable hours helps businesses monitor their revenue generation. By accurately recording billable hours, businesses can analyze their income streams, evaluate the profitability of projects, and make informed decisions about pricing, resource allocation, and future engagements.

Project Profitability

Tracking billable and non-billable hours provides insights into the profitability of projects.

It allows businesses to understand the actual time spent on billable work versus non-billable activities, such as administrative tasks, meetings, or internal projects. This information helps in assessing project profitability, setting project budgets, and identifying areas for improved efficiency.

Performance Evaluation

Tracking billable hours can be used as a performance metric for employees or contractors. It provides a quantitative measure of productivity, efficiency, and contribution to billable work.

This information can be valuable for performance evaluations, incentive programs, or identifying training needs.

Productivity Analysis

Monitoring billable and non-billable hours allows businesses to analyze productivity trends over time.

It helps identify bottlenecks, time-wasting activities, or areas for improvement in work processes. By understanding how time is utilized, businesses can implement strategies to increase productivity and efficiency.

Timesheets management

time tracking timesheet management

Another essential functionality of time tracking app is timesheets generation. This is what you usually have when time is logged properly.

Weekly timesheets

Weekly timesheets are timesheets that capture time entries for a specific week. They typically include columns or sections for each day of the week, allowing users to record their time spent on different tasks or projects on a daily basis. Weekly timesheets provide a comprehensive overview of time allocation for the entire week.

Daily timesheets

Daily timesheets are timesheets where users record their time entries for each day individually. They provide a detailed breakdown of time spent on specific activities or tasks throughout the day.

Daily timesheets offer a more granular view of time allocation and can be useful for analyzing productivity patterns or tracking billable hours more accurately.

Edit option

Timesheet editing functionality allows users to make changes or updates to their time entries. It enables users to correct any mistakes, add missing entries, or modify existing entries as needed.

Edit capabilities provide flexibility and ensure the accuracy of time records.

Filter option

Timesheet filters allow users to customize their view of time entries based on specific criteria. Users can apply filters to sort or narrow down time entries based on dates, projects, tasks, clients, or other relevant attributes. Filtering options help users focus on specific data subsets and retrieve the information they need more efficiently.


Exporting timesheets involves saving or downloading timesheet data in a specific file format, such as Excel, CSV, or PDF.

It allows users to create backups, share timesheet data with others, or integrate it with other software systems. Export functionality ensures data portability and enhances data utilization beyond the timesheet application itself.

Generating time reports

time tracking software reports

The main types of time reports generated by time tracking software include:

Project Reports

Project reports focus on time tracked for specific projects. They summarize the time spent on each project, including billable and non-billable hours, task breakdowns, and team member contributions. Project reports help in monitoring project progress, assessing resource allocation, and evaluating project profitability.

Client Reports

Client reports provide insights into the time spent on different clients or customers. They include information on billable hours, non-billable hours, tasks performed, and any associated projects.

Client reports are valuable for tracking client-specific workloads, analyzing profitability, and facilitating transparent client communication.

Team Reports

Team reports consolidate time data across team members. They offer a collective view of time allocation, task distribution, and project progress within a team.

Team reports help in assessing team productivity, identifying workload imbalances, and facilitating effective resource management.

How Time Tracking Software Works

Installation and setup

This is usual process of implementation time tracking (after you decide what app you will use):

  • Create an account on cloud version or desktop installation, depending if you use web based app or desktop app.
  • Invite your team to join
  • Obtain Licenses or Subscriptions
  • Book DEMO or review tutorials with service provider
  • Setting up user accounts and permissions
  • Configure your time tracking preferences
  • User Training and Onboarding

Time tracking process

This is technical step on how to tract time, on the user level:

  1. Starting and stopping the timer
  2. Logging breaks and interruptions
  3. Editing and adjusting time entries

Integrations and Collaboration

Time tracking software can integrate with a variety of tools and applications to enhance its functionality and streamline workflow.

Some common types of tools that time tracking software integrates with include:

Project Management Tools

legal time reporting

Time tracking software often integrates with project management tools such as Trello, Asana, Jira, or Basecamp.

Integration allows for seamless synchronization of project data, task assignments, and time tracking information. It enables users to track time directly within the project management tool and ensures accurate recording of time spent on specific tasks or projects.

Collaboration and Communication Tools

Integration with collaboration and communication tools like Slack, Microsoft Teams, or Google Workspace enables users to track time while working on team communication channels.

It simplifies time tracking by providing real-time collaboration features and allowing users to log time directly from within these platforms.

Calendar and Scheduling Tools

Integration with calendar and scheduling tools like Google Calendar, Outlook, or iCal allows for efficient time tracking by syncing events, meetings, or appointments with the time tracking software. Users can automatically populate their timesheets based on calendar events, ensuring accurate time recording.

Common Challenges and Solutions

Addressing privacy concerns

Addressing privacy concerns when using a time tracking tool is essential to ensure the protection of personal and sensitive data.

Here are some measures to address privacy concerns:

Transparent Communication

Clearly communicate to your team members or employees the purpose of implementing a time tracking tool and how their data will be collected, used, and protected.

Explain the benefits of time tracking and address any concerns or questions they may have.

Data Security Measures

Choose a reputable time tracking software provider that prioritizes data security. Look for software that offers encryption of data in transit and at rest, utilizes secure servers, and implements industry-standard security protocols to protect user information from unauthorized access.

Role-Based Access Controls

Implement role-based access controls within the time tracking software. Limit access to sensitive data and ensure that only authorized individuals have access to view or modify time tracking data. Define user roles and permissions based on job responsibilities and data needs.

Data Retention Policies

Establish clear data retention policies to specify how long time tracking data will be stored and when it will be deleted. Align your policies with legal requirements and industry best practices.

Regularly review and securely dispose of data that is no longer needed.

Compliance with Regulations

Ensure that the time tracking tool and its data processing practices comply with applicable privacy regulations, such as the General Data Protection Regulation (GDPR) or other regional data protection laws.

Familiarize yourself with the requirements and responsibilities of data controllers and processors to ensure compliance.

Emphasizing the benefits to employees

When communicating the benefits of time tracking to employees, it’s important to emphasize how it can positively impact their work and overall productivity.

Time tracking helps employees understand how they utilize their time, identify areas for improvement, and make informed decisions on prioritization.

It provides a clear overview of daily tasks and projects, ensuring better organization and time allocation.

Ultimately, time tracking allows employees to take control of their work, optimize their productivity, and achieve a healthy work-life balance.

Promoting transparency and trust

Transparency can be promoted by openly discussing the purpose and benefits of time tracking, addressing any concerns or misconceptions, and ensuring that employees understand how their time data is being used.

It’s important to provide clear guidelines and expectations for time tracking, including the specific tasks or projects to be tracked and any relevant deadlines.

Encouraging open communication channels where employees can ask questions, seek clarification, or provide feedback about the time tracking process helps build trust.

Regularly sharing aggregated time tracking data with the team, such as project progress or departmental insights, can further promote transparency and enable employees to see the bigger picture.

Emphasizing that time tracking is not about micromanagement but rather about optimizing productivity and resource allocation can help alleviate any apprehensions.

User adoption and training

User adoption and training on time tracking software are crucial to ensure that employees effectively use the software and understand its benefits.

Here are further explanations of the key points:

Providing comprehensive onboarding and training

When introducing time tracking software, it’s important to provide comprehensive onboarding and training sessions to users.

This can include interactive demonstrations, video tutorials, or user guides that explain how to navigate the software, track time accurately, and utilize its features effectively.

Clear instructions on tasks like creating projects, logging time entries, and generating reports should be provided. By offering thorough training, employees gain the necessary knowledge and confidence to use the software efficiently.

Offering ongoing support and assistance

 Ongoing support is essential to address any questions, concerns, or technical issues that users may encounter while using the time tracking software.

Establish a support system, such as a dedicated helpdesk or a designated contact person, to promptly assist users with their queries.

Regularly communicate with users to offer guidance, share best practices, and provide updates on any software enhancements.

This ongoing support ensures that users feel supported and confident in utilizing the software effectively.

Encouraging regular usage and feedback

To drive user adoption, it’s important to emphasize the benefits of regular usage and the impact it can have on productivity and efficiency.

Communicate the value of accurate time tracking and how it contributes to personal and organizational success.

Encourage employees to use the software consistently and provide feedback on their experience. Actively listen to their suggestions or concerns and consider incorporating them into future updates or enhancements.

This feedback loop demonstrates that their input is valued and helps in refining the software’s usability.

Why use a time tracking software?

Time Analytics time tracking software

Using time tracking software offers several benefits, including:

Improved Productivity

Time tracking software helps individuals and teams become more productive by providing insights into how time is being spent.

It highlights time-wasting activities, allows for better task prioritization, and helps identify areas for improvement.

Accurate Time Management

Time tracking software ensures accurate tracking and recording of time spent on tasks and projects. It eliminates the need for manual tracking, reduces errors, and provides a clear record of billable hours for client billing or project management purposes.

Enhanced Time Allocation

By understanding how time is allocated, individuals can allocate their time more effectively. They can identify areas where time can be optimized, streamline workflows, and ensure tasks are completed within set deadlines.

Data-Driven Decision Making

Time tracking software generates reports and analytics that provide valuable insights. These insights help in making data-driven decisions, identifying bottlenecks, allocating resources efficiently, and setting realistic goals based on historical data.

Improved Accountability

Time tracking software promotes accountability among individuals and teams. It helps track individual performance, ensures adherence to deadlines, and encourages a sense of responsibility for time management.

Streamlined Client Billing

For businesses that bill clients based on hours worked, time tracking software simplifies and automates the billing process.

It accurately records billable hours, creates invoices, and generates reports for transparent client billing.

Team Collaboration and Coordination

Time tracking software with collaboration features allows team members to coordinate their efforts, monitor project progress, and communicate effectively.

It promotes transparency, enables task delegation, and facilitates better collaboration among team members.

Work-Life Balance

Time tracking software helps individuals achieve a healthier work-life balance by providing insights into their time allocation.

It helps identify areas of improvement, avoid overworking, and ensure a more balanced distribution of time across personal and professional activities.

Employee Efficiency and Satisfaction

By optimizing time management, employees can work more efficiently, accomplish tasks within set timelines, and experience a sense of accomplishment.

This, in turn, contributes to increased job satisfaction and overall employee morale.

Professional Development

Time tracking software allows individuals to self-reflect and analyze their work habits. By identifying time management patterns and areas for improvement, individuals can develop better work strategies, prioritize professional development, and enhance their skills over time.

Time tracking software FAQ

Q: What is time tracking software?

A: Time tracking software is a tool or application that helps individuals and organizations track and manage the time spent on various tasks, projects, or activities.

It typically includes features such as timers, project management capabilities, reporting functions, and integrations with other tools.

Q: How does time tracking software work?

A: Time tracking software typically allows users to manually or automatically record their time spent on tasks.

It may include features such as timers that can be started and stopped, project and task management functionalities for organizing work, and reporting tools to generate insights and analyze time allocation.

Q: What are the benefits of using time tracking software?

A: Using time tracking software offers several benefits, including improved productivity, accurate time management, enhanced time allocation, data-driven decision making, streamlined client billing, improved accountability, team collaboration and coordination, work-life balance, employee efficiency and satisfaction, and opportunities for professional development.

Q: Can time tracking software be used for remote work?

A: Yes, time tracking software is often used for remote work as it allows individuals to track their time regardless of their location.

Many time tracking apps have mobile versions that can be accessed on smartphones or tablets, making it convenient for remote workers to track their time on the go.

Q: Is time tracking software suitable for teams?

A: Yes, time tracking software is beneficial for teams as it enables better coordination, task delegation, and project management.

It allows team members to track their individual time contributions, monitor project progress, and collaborate effectively.

It can also facilitate transparent communication and ensure accountability within the team.

Q: Is time tracking software privacy-friendly?

A: Time tracking software should prioritize user privacy and data protection. Look for software that allows users to control their data, set permissions and access levels, and comply with privacy regulations. It’s important to review the privacy policy and security measures implemented by the software provider before choosing a time tracking solution.

Q: Can time tracking software integrate with other tools?

A: Yes, many time tracking software solutions offer integrations with other tools and software. Common integrations include project management platforms, communication tools, accounting systems, and calendar applications. These integrations streamline workflows, automate data synchronization, and enhance overall productivity.

Q: Is time tracking software suitable for freelancers and independent contractors?

A: Yes, time tracking software is highly beneficial for freelancers and independent contractors. It helps accurately track billable hours for client invoicing, manage multiple projects simultaneously, and gain insights into time allocation and productivity. It can also assist in creating detailed reports for transparent client communication and project management.

Q: Can time tracking software be used across different industries?

A: Yes, time tracking software can be used in various industries, including professional services, IT, creative industries, healthcare, construction, and more.

The flexibility and customizable features of time tracking software make it adaptable to different work environments and industries.

Q: How can I choose the right time tracking software for my needs?

A: When selecting time tracking software, consider your specific requirements, such as the type of time tracking method you prefer (manual or automatic), the features you need (project management, reporting, integrations), the scalability of the software, user-friendliness, mobile accessibility, and budget. It’s helpful to read reviews, compare different options, and even try out free trials or demos to find the software that best suits your needs.

Bojan Radojičić

Bojan Radojicic, Master Degree in Economics, is a financial performance consultant with more than 15 years of experience. He is responsible for adding value services based on innovative solutions.

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