Overview
At the end of each month, take specific steps to accurately record your work-in-progress (WIP) projects in your financial records. This helps you keep track of project progress and determine the cost and revenue associated with each phase.
Who uses this feature
Administrators, office employees, managers, accountants, and bookkeepers
Primarily for Residential Construction and Commercial Construction business types
Feature configuration
Account configuration is required to use this feature. Please contact Technical Support for details.
Things to know
The Work in Progress (WIP) report gives you a detailed overview of ongoing projects, showing the financial status of each project. It includes information on costs incurred, revenue earned, and the progress of work compared to what has been billed.
For a project to be included in the WIP report, make sure that Percentage of Completion is enabled in the project settings.
The project start date on the Project Edit screen should have value in order to run the WIP report.
The WIP report is populated if the project completion date is either blank or after the date that is indicated in the As of date field.
Why it’s important
Performing month end activities for WIP projects helps show how much work has been done and how much is left. This way, you know exactly how much you’ve earned and how much you still need to bill.
You can track all costs, such as materials and labor, and compare them to the revenue earned for each project. This helps you understand whether a project is profitable or if there are any issues.
Accurate month end entries make it easier to prepare for audits and financial reports. It ensures everything is in order and complies with accounting rules.
Knowing how much money is tied up in WIP projects helps you manage your cash flow better. You can see if you need to adjust your billing or spending to keep things balanced.
Recommended month-end activities for WIP projects
Check all costs related to the project and make sure everything is recorded correctly. This helps you see how much money has been spent and if it matches the work done.
Make sure the revenue from the project is updated to reflect the actual work completed. If you’ve billed more or less than the value of the work done, adjust the records to match.
Adjust for overbilling and underbilling. If you’ve billed more than the work done or less, make corrections. This ensures your financial records show the true value of the work and what you should expect to receive.
Check that all your project accounts are reconciled. This means making sure what you’ve recorded as costs and revenue matches what is actually in your bank account or other financial records.
Work in Progress report
The Work In Progress (WIP) and Work in Progress (WIP) Active Projects reports in ServiceTitan provide a detailed overview of ongoing projects, showing the financial status of each project. The reports include information on costs incurred, revenue earned, and the progress of work compared to what has been billed. This report helps you monitor project profitability, manage cash flow, and ensure that your financial records accurately reflect the status of your WIP projects.
Use the Work in Progress (WIP) report for a high-level report and the Work in Progress (WIP) Active Projects report if you want to focus specifically on active jobs and need details for revenue and costs.
Adjust for overbilling or underbilling
When working with WIP projects at the end of the month, you might run into situations where a project has been overbilled or underbilled. Here’s how you can handle that using journal entries and understand its impact on your general ledger.
Note: The Over billing and Under billing columns in the Work in Progress report show you the calculated overbilling and underbilling amounts for each project.
Overbilling
Overbilling happens when you bill your customer more than the actual work done. For example, if you’ve billed $10,000 but have only completed $8,000 worth of work, you’ve overbilled by $2,000.
Correcting overbilling
To correct overbilling, you need to adjust your records to reflect the correct amount. To do this based on the example above, create a journal entry in your accounting platform to move the extra $2,000 from your revenue account to an account that tracks overbillings or unearned revenue. This way, your financial records accurately show what you’ve actually earned.
Underbilling
Underbilling happens when you bill your customer less than the work done. For example, if you’ve billed $6,000 but the work done is worth $8,000, you’ve underbilled by $2,000.
Correcting underbilling
To correct the underbilling from the example above, you need to record the additional $2,000 in your revenue account to match the correct value of the work done. You also need to make an entry to show that you expect to receive this additional amount from the client.
Impact on the general ledger
When you make journal entries to adjust for overbilling or underbilling:
Overbilling adjustment: The revenue recorded is reduced and shows a liability or unearned revenue until the work is actually completed.
Underbilling adjustment: Your revenue is increased to accurately reflect the work done and records a receivable to show the amount you expect to receive.