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How Can Security Companies Reduce Overtime Costs?
Security companies reduce overtime costs by stopping overtime before it is scheduled. That means knowing which client contracts allow overtime billing, using scheduling software that flags overtime as shifts are built, reviewing overtime data every week, integrating scheduling with payroll and billing, catching unbilled overtime before payroll closes and hiring enough officers to cover every post. The sections below explain each step.
As a security contractor with a distributed workforce, labor is always going to be your largest expense. Wages make up the majority of revenue in the labor-intensive security industry, so every unplanned overtime hour cuts directly into already thin margins.
Overtime for hourly employees is the number one profit killer, particularly in service industries with thin margins like contract security. The secret to cutting labor costs by reducing overtime? Stop it before it starts. Below are a few ways security contractors can reduce overtime and improve schedule optimization.
Know your service-level agreements (SLAs).
SLAs dictate the service standards and pricing obligations you’re required to deliver to your customers. If your contracts don’t allow you to bill your customers for overtime, you’re still on the hook for paying it. Even if your SLAs allow for overtime to be billed back to the client, you still need to keep it in check so you’re delivering the service your clients want at the price they’re prepared to pay.
How Does Scheduling Software Prevent Overtime Before It Happens?
If you’re still using paper (yes, that includes spreadsheets) to schedule your security officers and track their time, you typically can’t spot overtime problems until after they happen. Even if you have scheduling software in place, make sure you’re leveraging all its features. You should be able to see several weeks at a time to spot any overtime problems before they happen. In fact, your solution should be able to alert you to those issues as you’re scheduling.
Set clear goals.
You’ll never know if you’re making progress if you don’t have clear schedule optimization benchmarks and goals. First, you need to know how much overtime your officers are working each week. If you don’t know how to get that number, consider looking into implementing an integrated scheduling solution. Once you have those overtime benchmarks, you can then set specific goals on reducing overtime. Get as specific as you can and be reasonable about what you can achieve.
Dig into your data.
Overtime isn’t always avoidable, but you can reduce it and control it through regular data review. Reports can help you find bottlenecks in your process, overtime patterns, discrepancies and exceptions. If you’re using a well-rounded scheduling system, you’ll get real-time attendance information that equips your schedulers and dispatchers with a live view of who’s on site and who’s not.
Integrate your scheduling and payroll systems.
If your scheduling software is integrated with your accounting and HR/payroll systems, you can avoid clunky processes, redundant data entry and the errors that go along with them. If your scheduling tasks are handled effectively, payroll and billing information is already in the system. From an operations perspective, that means when you properly manage your schedules, you’ve ensured both billing and payroll figures are correct in one step.
How Do You Catch Unbilled Overtime Before Payroll Closes?
Unbilled overtime happens when officers work premium hours that your contract allows you to bill, but the hours never reach the client invoice. To catch it before payroll closes, compare scheduled hours to actual punches for every post, flag any shift that pushes an officer into overtime, check each flagged hour against the SLA to confirm whether it is billable and route approved hours to billing in the same pay cycle. When scheduling, time and attendance, payroll and billing share one system, this review happens as part of normal payroll processing instead of weeks later.
Hire more security officers.
If you’re facing a constant struggle to fill shifts without putting your officers into overtime, you probably need to hire more people. If you’re not fully staffed, this issue is never going to go away, no matter how efficient your other processes are. Partner with your HR department to assess the existing candidates and start conducting interviews as soon as possible.
Recognize improvements.
Overtime isn’t just a problem for your scheduling staff to figure out. Often it involves a good amount of organizational change and teamwork from account managers, HR, upper management and executives to pinpoint issues, resolve them and put better practices into place.
For security contractors, overtime can be a very costly problem. In 2026, getting a handle on overtime is even more important as wages rise and the cost of doing business climbs. The same controls also help you take on new contracts without adding overtime, since you can see open coverage and labor cost before you commit. Compare options in our guide to the best security guard management software or explore security guard software from TEAM Software. For more in-depth information and additional tips on how to improve your schedule optimization, download our Security Contractors’ Guide to Reducing Overtime.
Frequently Asked Questions About Reducing Security Guard Overtime
How can security companies reduce overtime costs?
Review client SLAs for overtime billing terms, use scheduling software that flags overtime while shifts are being built, review overtime reports weekly, integrate scheduling with payroll and billing and hire enough officers to cover every post.
What causes overtime at security guard companies?
The most common causes are understaffing, last-minute call-offs, shift swaps that push officers past their weekly hours and schedules built without visibility into hours already worked.
Can security companies bill clients for overtime?
Only when the service-level agreement allows it. If the contract does not allow overtime billing, the company still pays the overtime and absorbs the cost.
How does software help a security company scale to new contracts?
Integrated scheduling, time and attendance, payroll and billing software shows open coverage and labor cost before you commit, so you can staff new posts without relying on overtime.
