What Is WIP Reporting and Why Is It Important for Contractors?
A WIP (work-in-progress) report is a schedule that shows how every open construction contract is performing financially. It compares what a job has earned with what has been billed. Sureties, banks, and CPAs use it to judge whether a contractor's jobs, and its financial statements, can be trusted.
What a WIP Schedule Includes
Contract value: original contract plus approved change orders
Estimated total cost: current estimate of the total cost to finish the job
Estimated gross profit: contract value minus estimated total cost
Cost to date: actual costs posted to the job so far
Percent complete: cost to date divided by estimated total cost
Earned revenue: contract value times percent complete
Billed to date: what you have invoiced the customer
Overbilling or underbilling: billed to date minus earned revenue
Cost to complete: estimated total cost minus cost to date
Overbillings and Underbillings, in Plain Terms
Overbilling: you billed more than you earned. It is a liability. It can mean you are managing cash well, or that you are front-loading bills.
Underbilling: you earned more than you billed. It is an asset, but sureties look at it closely. Large underbillings can signal billing delays or cost overruns.
Why WIP Reporting Matters for Contractors
It catches losing jobs early. Profit fade shows up month by month, not after the job closes.
It drives your financial statements. Revenue on percentage-of-completion comes from the WIP.
Sureties rely on it. Underwriters compare WIP schedules over time to see if your estimates hold up.
It protects cash. Underbillings point to money you have earned but not collected.
Common WIP Mistakes
The WIP does not tie to the general ledger
Estimated costs are never updated
Change orders are missing or not approved
The WIP is only prepared once a year
Want to see how WIP fits into the bigger picture? Read How Financial Statements Impact Your Bonding Capacity.
How SuretyCFO Helps
SuretyCFO prepares a monthly WIP schedule for commercial contractors with $5M to $50M in revenue, tied to the books and reviewed at the CFO level. We are based in Old Bethpage, New York, and work virtually with contractors nationwide.
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