The Hidden Cost of Manual Workarounds in Growing Businesses

01

Manual Workarounds Are Not Always the Problem

A workaround is an alternative way of completing work when the normal process does not adequately support a particular situation.

An employee might maintain a spreadsheet because the existing application does not provide a suitable report. A manager might approve an unusual request through a direct conversation because the formal approval process does not cover it. A team might maintain a separate tracker to coordinate work across departments.

These decisions can be reasonable. Workarounds sometimes help employees respond to genuine operational requirements and can reveal shortcomings in existing processes.

Research examining organizational workarounds has identified situations where employees' actual activities differ from documented procedures and system records. The distinction matters: a workaround can help complete the work while simultaneously creating inconsistencies in the information used to manage it. [7]

The objective should not be to eliminate every workaround. It should be to understand why it exists, whether it remains useful and whether the business can reliably account for the work it performs.

02

When a Workaround Becomes the Unofficial Process

The risk increases when an alternative method is repeated so frequently that employees begin treating it as the normal way of working.

Several operational signals deserve attention.

None of these signals independently proves that a business needs new software. They indicate that the existing operating process deserves closer examination.

A repeated workaround can eventually become an undocumented dependency. New employees learn it informally, managers build expectations around it, and the business becomes increasingly dependent on a process that may never have been properly designed.

The result is an operating model that exists in practice but is difficult to manage systematically.

• Repeated data entry: The same information is entered into multiple applications because records do not move reliably between systems.
• Parallel tracking: Employees maintain personal spreadsheets or documents because the official system does not provide sufficient visibility.
• Memory-dependent follow-up: Important actions rely on individual reminders, inboxes or informal conversations.
• Unclear ownership: Work moves between departments without a clearly accountable person for the next action.
• Unreliable reporting: Managers must collect and reconcile information manually before they can understand what is happening.

03

The Hidden Cost Is Larger Than the Time Spent

Manual workarounds create several kinds of operational exposure. Their financial significance depends on the volume of work, the cost of correction and the consequences of errors.

Labor capacity: Repeated entry, checking, follow-up and reconciliation consume employee time that could otherwise support customers, delivery, analysis or business development.

A 2024 Intuit QuickBooks survey of 630 US business owners and executives reported that respondents spent an average of 25 hours per week on manual data entry and reconciliation. This is a self-reported survey finding, not a universal benchmark for every American SMB. [1]

The important management question is how much of that activity is necessary and how much exists because the underlying process is poorly coordinated.

Rework: An incorrect or incomplete record rarely requires only one correction. Someone must identify the discrepancy, locate the original information, determine what changed, update the relevant records and confirm that the correction reached the necessary people.

The cost accumulates across these activities. Harvard Business School's Time-Driven Activity-Based Costing methodology offers a practical way to understand this burden. It estimates the cost of an activity using the time required to perform it and the cost of the capacity supplying that activity. [2]

For an SMB, this can begin with a simple measurement of recurring corrections, exceptions and repeated administrative tasks.

Financial friction: Operational inefficiency can also affect financial visibility. When invoices, approvals, payment records and reconciliations are maintained across disconnected processes, management may find it harder to establish what is outstanding, what has been approved and which obligations require attention.

The Federal Reserve's 2024 Report on Payments found that approximately four out of five surveyed small firms faced payment-related challenges. Xero's June 2026 US Small Business Insights reported an average of 29.3 days to be paid and 8.5 days of payment lateness. These findings describe payment challenges and timing, not proof that manual workarounds caused late payments. [3] [4]

Control and visibility: Parallel records and undocumented approvals can make it harder to establish who authorized a transaction, which record is authoritative and whether supporting evidence is complete.

ACFE research into investigated occupational fraud cases identifies weaknesses such as inadequate internal controls and insufficient management review among contributing factors. Its findings should not be interpreted as the fraud rate of the US SMB population. [5]

The broader operational lesson is that business records need more than successful data entry. They need accountability, verification and a reliable relationship with the underlying transaction.

04

Why Adding Another Tool May Preserve the Problem

Buying another application can feel like a direct response to operational friction. However, the underlying problem may have little to do with the absence of another software feature.

Consider three different situations.

First, the business may not have clearly defined the process. Employees do not know who owns the next action, when approval is required or what information must accompany a request.

Second, the required functionality may already exist in the software, but it has not been properly configured or consistently adopted.

Third, the business may have a genuine technical limitation. Two systems may need to exchange information, or an existing platform may not support a critical business requirement.

These situations require different responses.

IRS recordkeeping guidance allows businesses to select a recordkeeping system appropriate to their needs, provided it clearly reflects income and expenses and preserves supporting documentation. The important requirement is reliable information, not a particular software brand. [6]

Similarly, research into process-data quality highlights that poor or incomplete system records can undermine the conclusions drawn from operational analysis. [7]

Connecting two applications is not the same as connecting the work between them.

05

Diagnose the Actual Cost Before Changing the System

A useful diagnosis begins with one consequential workflow, not an attempt to redesign the entire company.

Choose a process that affects customers, revenue, financial control or employee capacity. Follow a real example from its starting point to its final outcome.

Start by examining six areas:

• Trigger: What starts the work, and how is it captured?
• Ownership: Who is accountable for the complete outcome?
• Handoffs: Where does responsibility move between people or teams?
• Information: Which system contains the authoritative record?
• Exceptions: What happens when the normal process fails?
• Outcome: How does management verify completion?

06

Measure Repeated Work

Once the workflow is understood, measure the repeated work rather than relying on assumptions.

Useful indicators include:

• Manual touches per transaction.
• Frequency of repeated data entry.
• Number of corrections and exceptions.
• Time required to resolve an exception.
• Share of important tasks with an identifiable owner.
• Time required to prepare reliable management reports.

07

Estimate the Cost of Rework

A business can estimate the labor capacity consumed by recurring rework using a straightforward calculation: occurrences multiplied by additional time per occurrence, multiplied by the fully loaded hourly labor cost.

Illustrative example: Suppose ten employees each spend an additional 15 minutes per working day on repeated entry, correction or manual reconciliation.

Across 250 working days, the calculation is: 10 employees multiplied by 0.25 hours multiplied by 250 days, resulting in 625 hours annually.

Using the US Bureau of Labor Statistics' June 2026 national private-industry average employer compensation of $46.89 per hour, that represents approximately $29,306 in labor-capacity value. [8]

This is a hypothetical calculation, not a measured loss or guaranteed cash saving for an actual business. The rate is a national benchmark, not the employer's own compensation rate. Reclaimed time also creates value only when the business can use that capacity productively.

The purpose of this exercise is to make previously invisible work measurable.

08

Choose the Smallest Change That Restores Control

Once the actual problem is understood, the business can determine the appropriate intervention.

• Unclear responsibilities: Clarify ownership and decision rights.
• Unnecessary process steps: Simplify the workflow.
• Existing features are poorly configured: Improve the current software setup.
• Required information does not move between systems: Evaluate integration.
• Repetitive tasks follow reliable rules: Consider automation.
• Core requirements cannot be met sustainably: Evaluate replacement or custom development.

09

Keep Important Decisions Accountable

The order matters.

Automation should follow a defined process, not substitute for one. A system that moves incomplete or unreliable information faster can make existing problems harder to identify.

Important exceptions should have a defined route to human review. Financial approvals, sensitive account changes and unusual transactions may require independent verification rather than unrestricted automated execution.

COSO and ACFE guidance recognizes that smaller organizations may not be able to separate every financial responsibility between different employees. It recommends alternative review and verification controls to reduce the resulting exposure. [9]

The best intervention is not necessarily the most technologically advanced one. It is the smallest sustainable change that addresses the actual operational requirement.

10

Build Systems Around How the Business Actually Works

A growing business does not become more reliable simply by accumulating software products.

It becomes more manageable when the flow of work is understood, responsibilities are clear, information can be trusted and important outcomes can be verified.

That requires examining the relationships between people, processes, data and technology rather than treating each software application as an isolated solution.

For business leaders, the more useful question is not how many tasks can be automated. It is where the current operating model loses visibility, ownership or control.

This is the thinking behind Business Systems Engineering: understanding how a business actually operates and designing the processes, integrations and systems required to support it.

Better systems begin with a better understanding of the work itself.