Stop overbilling before it starts and automate your contract compliance process
Eliminate overbilling, cost leakage, and other risks by tackling non-compliant timesheets
Non-compliant timesheets are a major concern in contract compliance. Even the most minor of issues can rapidly contribute to overbilling and cost leakage.
The reason why is simple: a manual process for reviewing timesheets means that common issues are often able to sneak by undetected for long periods of time.
Procurement, supply chain, and maintenance teams everywhere are stuck dealing with manual processes in an increasingly digitized world. Beyond how tedious this is, it’s a major concern for accurately predicting and managing project expenses.
So what’s the solution?
Automating contract compliance gives businesses like yours better insight into day-to-day contractor operations while freeing up your team to focus on more strategic initiatives.
In this blog, we’ll explore how you can get started with automating contract compliance, its benefits, and how it can unlock greater cost savings for your organization.
How can automation help?
In theory, reviewing timesheets should be a simple and straightforward process. Your team gets the timesheet, checks it against the contract, and signs off.
But in reality, no one has time to manually cross-check every line item against dense contract terms - especially when it means hours of staring and comparing.
The sheer volume of timesheet entries makes manual review nearly impossible. Even a routine maintenance project generates dozens of daily submissions. Now scale that to a capital project: hundreds of submissions a day from dozens of contractors, and it’s easy to see how errors slip through the cracks. What’s harder to see is just how quickly those small errors add up to major costs.
We’ve seen millions lost to issues buried in contractor timesheets - costs that slip past even experienced teams because they’re hidden in plain sight. We’ve written at length about the common costs hiding in contractor timesheets. Most of them fall into five familiar (and frustrating) categories:
- Incorrect labor rates
- Non-compliant labor hours
- Travel expense discrepancies
- Non-compliant equipment expenses
- Unapproved material costs
It’s death by a thousand cuts, and without a way to catch these issues early, the budget ends up paying the price.
This gives you a sense of just how much information your team is expected to track - every rate, hour, and cost detail buried in contractor submissions. Trying to manage that manually isn’t just inefficient - it’s unrealistic. Automation changes the game. It allows every timesheet to be checked against contract terms in real time, flagging errors instantly and ensuring nothing slips through the cracks.
Leveraging automation for contract compliance
Automation is the clear solution to ensure that every timesheet submission is automatically cross-checked against your approved contract terms—but where do you begin?
The first step is data—a lot of it. At PayShepherd, we break this data down into two core categories:
Commercial data inputs:
These define the rules of engagement - your source of truth for what's contractually allowed:
- Contracts
- Union agreements
- Purchase orders
- Open orders
- Site access
Contractor data inputs:
This is the operational side - the day-to-day data you’re validating against the contract:
- Labor and equipment use reports
- Progress reports
- Material reports
- Subcontractor reports
- Worker and equipment rosters
When your commercial and contractor data sources are connected and automated, you’re no longer relying on guesswork - you’re verifying every line item instantly. That’s how you turn contract compliance from a time-consuming task into a strategic advantage.
These two datasets represent both sides of the client–contractor relationship. Your commercial data inputs set the rules, while your contractor data inputs show what’s actually happening.
Traditionally, comparing these two sets of data was a slow, manual, line-by-line process that took hours and often missed critical details. But today’s job sites are becoming increasingly digital. Contractors are clocking in with mobile tools, logging expenses online, and submitting reports through user-friendly platforms.
That shift makes automation not just possible but essential.
All these tools can be configured to automatically report data to a central system, allowing you to rapidly confirm whether it’s compliant or not. Automating this comparison and confirmation in turn allows you to access even greater insights into your operations while tracking contractor performance, enforcing compliance, and optimizing resource allocation.
As an example, the PayShepherd platform automatically validates all contractor entries against your contract terms as soon as they’re submitted. Deviations are flagged in real-time for follow-up, whether it’s the result of an incorrect rate, mismatched gate data, or other issues. Best of all, our team manages the implementation and set-up based on a careful consultation with your business to ensure we’re capturing all necessary information.
By removing the need for manual review, your team is able to take a proactive approach to contract compliance, making sure there are no hidden costs ready to surprise you when invoices are submitted. The second any contractor data is non-compliant, users are notified in real-time. Contractors can provide an explanation for the issue and clients are able to accept submissions at their discretion.
In fact, systems can be set up to prevent non-compliant submissions entirely. Only rates and hours within pre-approved contract terms will be accepted by the system, effectively eliminating overbilling and cost leakage entirely—all while ensuring clients have access to up-to-the-minute data insights.
And it’s not just beneficial for clients. Contractors get to experience benefits, too. Far from being bound to old-school form submissions and errors with manual data entry, automated digital systems allow rapid corrections or resubmissions to ensure accurate data is delivered to the client. In fact, these automated systems tend to facilitate even greater collaboration between clients and contractors.
Improving contractor relationships
Speaking of contractors, automating contractor compliance holds a host of benefits for them, too. At first glance, some contractors might be hesitant to fully adopt these tools—the idea of even greater scrutiny of their work could lead to some defensive attitudes.
But like we mentioned above, automating contract compliance helps reduce errors and offers greater flexibility and control over timesheet submissions. Any contractor management platform should provide an opportunity for contractors to flag and explain why a timesheet may seem outside the norm, in turn allowing operators and clients to review and accept or reject the submission.
The final decision to approve or reject these flagged transactions rests with the client’s discretion—but by providing more tools to contractors, you’re able to leverage automation to foster greater collaboration and communication.
Unlocking cost savings
So automating contract compliance streamlines manual tasks and frees up internal team resources—great. But what other benefits does it offer? How, exactly, does it unlock further cost savings?
Measuring these savings typically boils down to measuring efficiency—a serious challenge without a clear baseline. In our experience, a customer implementing PayShepherd typically experience efficiency gains ranging from 1.5% to 2% of the total contractor spend managed through our system.
With that as our benchmark, let’s take a closer look at what cost savings timesheet review could provide for a $100 million facility.
Let’s start with a few assumptions for this hypothetical:
- The business has 13,726 timesheets submitted every year
- On average, manual review takes 30 minutes per timesheet
- The labor rate is $100 an hour
Applying automation to these operations, this business is able to reduce timesheet review to 10 minutes for all timesheets, saving 20 minutes of time per timesheet (or 0.33 hours).
If we crunch the numbers, it looks something like this:
13,726 timesheets x 0.33 hours x $100 = $452,958 in cost savings per year
That’s no small figure, and best of all, it only reflects the efficiency gained from implementing automation. We haven’t even touched on the potential savings found from eliminating the overbilling and hidden costs that are prevalent in contractor timesheet submissions.
Getting started with improving contract compliance
Ensuring your vendors adhere to contract terms is a critical component for businesses that rely on third-party workers. Automating these tasks helps reduce the potential for conflicts with your contractors while enhancing overall operational efficiency.
The proactive approach offered by automated contract compliance offers a host of benefits to businesses, including financial gains and stronger vendor relationships. As daunting as it might seem to get started, the cost of not automating effectively means you’re leaving money on the table.
Without automation, your team is stuck reconciling all the various data and costs manually, increasing the administrative burden while hampering your financial flexibility.