𝐇𝐨𝐰 𝐭𝐨 𝐜𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐖𝐈𝐏 (𝐖𝐨𝐫𝐤 𝐢𝐧 𝐏𝐫𝐨𝐠𝐫𝐞𝐬𝐬) 𝐚𝐧𝐝 𝐰𝐡𝐲 𝐢𝐬 𝐢𝐭 𝐢𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭…

 WIP shows if a contractor is accurately estimated job costs in a profitable manner. It helps to manage cash and summarized the value of work not yet invoiced.

To calculate WIP you need Contract Value / Budget Cost / Actual Cost / Billed Revenue.

𝐖𝐈𝐏 = (𝐀𝐜𝐭𝐮𝐚𝐥 𝐂𝐨𝐬𝐭 / 𝐁𝐮𝐝𝐠𝐞𝐭 𝐂𝐨𝐬𝐭) 𝐱 𝐂𝐨𝐧𝐭𝐫𝐚𝐜𝐭 𝐕𝐚𝐥𝐮𝐞 – 𝐁𝐢𝐥𝐥𝐞𝐝 𝐑𝐞𝐯𝐞𝐧𝐮𝐞

Actual / Budget = % Complete
% Complete x Contract = How much should be invoiced
Subtracting Billed Revenue = Avoid repeat billing
If you calculation = ZERO … Congratulations
If your calculation = POSITIVE … Work has been completed and not invoiced
𝐈𝐟 𝐲𝐨𝐮𝐫 𝐜𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐢𝐨𝐧 = 𝐍𝐄𝐆𝐀𝐓𝐈𝐕𝐄 … 𝐍𝐨 𝐁𝐮𝐞𝐧𝐨! 𝐘𝐨𝐮 𝐚𝐫𝐞 𝐛𝐢𝐥𝐥𝐢𝐧𝐠 𝐢𝐧 𝐞𝐱𝐜𝐞𝐬𝐬 𝐨𝐫 𝐚𝐡𝐞𝐚𝐝 𝐨𝐟 𝐭𝐡𝐞 𝐉𝐨𝐛.

Make sure that you are working with a qualified job cost accountant that can help with your business. Not all accountants are well versed in job costing; it's a specialized niche!