A 3% Timesheet Error Rate Was Costing This Security Company $18,000 Per Year in Lost Revenue

The security company owner in Perth had a nagging feeling about his numbers. Revenue was growing — he’d added three new client sites in the past six months — but margins were shrinking. He was busier than ever and somehow making less money per dollar billed.

He hired a bookkeeper to audit his billing. She spent three weeks reconciling guard timesheets against client invoices against payroll records. What she found was uncomfortable.

Guard timesheets consistently showed shifts ending at round numbers — 6:00 AM, 10:00 PM — even though the actual shift schedules were 5:45 AM and 9:45 PM. Across 40 guards and hundreds of shifts per month, that 15-minute rounding was adding up to approximately 60 unbilled hours per month. At an average billing rate of $35/hour, that’s $2,100 per month in revenue never invoiced. $25,200 per year.

But it was worse than just rounding. Overtime calculations were inconsistent. Some guards who worked 42 hours in a week were billed entirely at the regular rate — the overtime premium for hours 38-42 was never applied. Three public holidays in the past quarter had been billed at regular rates instead of penalty rates.

Total identified billing leakage: approximately $18,000 per year. On a $600,000 revenue base with 6% margins ($36,000 net profit), that leakage represented half the company’s annual profit.

The owner’s reaction: “I knew we were leaving money on the table. I didn’t realize we were leaving the whole dinner.”

The Guard Hours Billing Challenge

Guard hours billing in the security industry is uniquely challenging because of the volume, variety, and precision required.

Volume: A 50-guard company running 24/7 operations across multiple sites generates hundreds of individual shift records per week. Each one needs to be captured accurately, allocated to the correct client, and billed at the correct rate.

Variety: Billing rates vary by shift type (day/night/weekend), guard classification (standard/supervisor/armed), and client contract terms. Some clients pay a flat monthly fee. Most pay per hour with different rates for different circumstances. Some contracts include callout fees for alarm responses. Others have minimum shift lengths regardless of actual time on site.

Precision: On 6% margins, a 3% billing error is catastrophic. You’re essentially giving away half your profit through administrative mistakes. Every unbilled hour, every miscalculated overtime premium, every missed public holiday rate is a direct hit to the bottom line.

The Five Billing Errors That Eat Margins

Error 1: Shift Time Rounding

Guards start shifts at 5:45 AM and end at 2:15 PM. But the timesheet shows 6:00 AM to 2:00 PM. The guard rounded for convenience. Nobody catches it because the difference per shift is small — 30 minutes. But 30 minutes times 5 shifts per week times 40 guards is 100 hours per week. At $35/hour, that’s $3,500 per week in untracked time.

In fairness, some of that rounding goes in your favor (guards record slightly longer shifts than worked). But research consistently shows rounding favors the guard more often than the employer, because guards arrive early and leave late less frequently than they arrive late and leave early.

Error 2: Overtime Threshold Miscalculation

Overtime rules in the security industry are complex. A guard might work across multiple client sites in a single week. If they work 20 hours for Client A and 22 hours for Client B, their total is 42 hours — 4 hours of which should be billed at the overtime rate. But which client gets the overtime charge?

Most security companies handle this by billing each client only the hours on their site at the regular rate. The overtime premium evaporates because nobody allocates the overtime hours to the correct client. Over a year, this can represent thousands of dollars in unbilled overtime premiums.

Error 3: Public Holiday and Penalty Rate Omission

Public holidays require penalty rates — typically double time. But public holidays vary by state, some companies miss substitute holidays, and the billing system might not flag the rate change automatically. A guard works ANZAC Day at the regular $35/hour instead of the $70/hour penalty rate. On a 12-hour shift, that’s $420 in unbilled revenue from a single shift.

Error 4: Wrong Client Site Allocation

A guard is scheduled for Site A but gets reassigned mid-shift to Site B due to an emergency. The timesheet still shows Site A. Client A is billed for hours the guard didn’t work at their site. Client B isn’t billed for the hours the guard actually worked. When Client A disputes the invoice, you credit them — but forget to invoice Client B. Revenue lost.

Error 5: Late Invoicing and Cash Flow Drag

Industry research shows invoices sent within 48 hours of the billing period get paid significantly faster than those sent after a week. Yet many security companies invoice monthly, often 7-10 days after month-end. That’s 5-6 weeks between when the guard works the shift and when the invoice arrives. Clients who receive late invoices are more likely to dispute them (“I can’t verify shifts from 6 weeks ago”) and slower to pay.

Building an Accurate Billing Pipeline

The Cash Flow Acceleration Effect

In the security industry, the gap between working a shift and getting paid for it is typically 45-75 days: the guard works the shift, the timesheet is processed (1-2 weeks), the invoice is generated (another week), the invoice is sent (a few days), and the client pays within their terms (14-30 days).

Meanwhile, you’re paying guards fortnightly. Your cash cycle is structurally negative — you pay for labor 30-45 days before you receive revenue for it. This is why so many security companies struggle with cash flow despite being profitable on paper.

Automated invoicing compresses the front end of this cycle dramatically. When invoices are generated within 48 hours of the billing period end (instead of 7-14 days), and sent immediately with accurate detail that minimizes disputes, the average invoice-to-payment cycle shrinks by 2-3 weeks. On a $500K annual revenue base, that’s roughly $20K-$30K in improved working capital.

Client Relationship Benefits

Accurate, detailed, timely invoicing doesn’t just improve your cash flow — it improves your client relationships.

Clients who receive invoices with full shift-level detail — guard name, date, exact hours, rate applied — have visibility into what they’re paying for. They can verify the service they received. They rarely dispute these invoices because the detail speaks for itself.

Compare that to a single-line invoice: “Security services — October 2025 — $8,450.” The client has no way to verify this. They query it. You spend hours pulling timesheets. The payment is delayed by 3 weeks while the dispute is resolved. Everyone wastes time.

Detailed invoicing is also a retention tool. When a client can see the exact service delivery — who was on their site, for how long, at what rate — they perceive greater value. Transparency builds trust. Trust retains contracts.

The Bottom Line

Guard hours billing is the financial engine of a security business. Every other operational process — hiring, training, compliance, key management — exists to support the delivery of guard hours to clients. If the billing process is inaccurate, every other investment is undermined.

On 6% margins, there’s no room for 3-5% billing errors. The math is unforgiving: a security company that bills accurately and on time doubles its effective profit compared to one that loses 3% to administrative mistakes.

The solution isn’t hiring more bookkeepers or spending more time on timesheets. It’s automating the calculations that humans consistently get wrong — overtime thresholds, penalty rates, shift rounding, multi-site allocation — and generating invoices that are detailed enough to eliminate disputes and fast enough to accelerate cash flow.

Accurate billing isn’t a back-office function. It’s the difference between a security company that survives and one that thrives.