There is an art to being able to efficiently run an advanced construction business. Between securing construction jobs, ordering materials, organizing revenue and expenses, and managing different teams – construction businesses have a lot on their plate. As with any business, it is vital to remain organized when it comes to your finances, and even more so when it comes to more complex business models like what we see throughout the construction industry. Work-in-progress (WIP) reports are used to track various construction projects to help ensure smooth financial processes and keep your construction business thriving, organized, and successful.
The Basics of a WIP Report
Work-in-progress reporting is a financial document used to manage and balance budgets associated with various construction projects. When you have many projects going on simultaneously, and all in different stages of development, it is essential to have a way to track the progress as these projects are being done. Calculating the progress of each project becomes beneficial so that you are able to take proactive steps in making sure that each project stays within the allotted budget before going over. A WIP report allows you to have a full perspective on each job, at any given time, giving you information on the costs, profitability, and revenue of each job. The basic components, and benefits, of a WIP Report are included below.
Calculating Overbilling or Underbilling
When a construction job is being charged more for the project than it is worth, overbilling can happen. When the construction job has been completed but the contractors bill for less than it is worth, underbilling can occur. This financial document keeps projected costs, percentage of the work completed, and earned revenue organized so that you are able to track the real-time progress of each project.
Managing Budgets Effectively
With meticulous records kept within the WIP report, managing the various budgets for different projects becomes so much easier. Financials must be kept organized in order to ensure that bills are being covered properly and that your cash flow remains healthy throughout the different construction projects. Every good business owner knows how imperative it is to take control of your finances – and not let those finances control you. Through the Work in Progress tracking, you can move budgets around as necessary if you see projects that are not yet completed that are likely to go over budget.
Accurate Financial Statements
This extensive financial document creates the opportune platform to create accurate financial statements that will be used throughout the different aspects of your construction business. These statements outline what is being spent on each project, giving you a snapshot of your business’s financial health. Having an accurate, real-time perception of the exact costs, expenses, and progress of each project allows you to be able to make smart and informed financial decisions for your business to ensure profitability. This tool allows you to have a better understanding of your business’s financial health amidst a complex industry.
Accounting Services and Tools for Construction Businesses
With so much to keep track of in this complex industry, having the proper tools and accounting support helps to ensure financial stability and success. When you have intimate knowledge about your construction project finances at your disposal, you are able to be in more control with your budgets and decisions to ensure success in the future. The WIP report is just one of the effective tools that you can use to stay organized and informed about your construction projects as they happen so that you can take proactive steps toward successful completion.
The accounting services at Cooper Norman can help you set up a WIP reporting system for your construction business. Do not navigate this industry in the dark – use the accounting tools at Cooper Norman to light up your way and see the whole picture throughout this business, starting with the WIP report. Contact us today to learn more!