A Work-in-Progress (WIP) report is a financial document that tracks the progress of a construction project by comparing actual costs and revenues against the budgeted amounts. It helps contractors monitor project profitability and cash flow.
Why WIP Reports Matter in Construction
WIP reports provide a real-time snapshot of a project’s financial health, allowing contractors to identify cost overruns, billing discrepancies, and cash flow issues. They are critical for financial forecasting and compliance with accounting standards.
Best Practices for Managing WIP Reports
To ensure accurate reporting, contractors should update WIP reports regularly, track job costs meticulously, and use construction financial software to automate calculations. This reduces errors and improves financial transparency.
Related Terms: Progress Billing, Retainage, Over/Under Billings, Percentage of Completion Accounting