Why Work in Progress Accounting Schedules are so Important
Work in progress accounting schedules
A Work in Progress (WIP) report can be an invaluable tool for assessing the quality of internal financial statements, as WIPs show the total balances of both overbillings and underbillings.
What’s more, WIP is the number one source of all information found on both the balance sheet and the income statement.
But, within this, why are Work in Progress accounting schedules so important?
Why Work in Progress accounting schedules are so important
Work In Progress accounting schedules not only help track all current ongoing projects’ profitability metrics but they also can help third-party users determine a company’s overall profitability and liquidity by analysing overbilling and underbilling on significant contracts.
And, indeed, carefully managing WIP ensures it is kept at an appropriate level for business as a higher value of WIP than appropriate indicates that too much capital is tied up in unfinished work. This, in turn, indicates that sales have not been realised and therefore profit has not or will not be made, impacting cash flow as well as profitability.
Often, a higher than appropriate WIP indicates an issue with operations and processes, including -
● Inaccurate or untimely data collection
● A lack of resources in comparison to orders
● Under utilised resources and/or resource capacity
● Late invoicing
As such, WIP schedules help to improve planning, efficiencies, and resource management; alongside allowing you to identify issues within and improve the processes associated with invoicing and invoice management.
Credit control software and WIP management
CreditForce is the most effective collections management and credit control software on the market today, providing access to vital information about your clients, WIP and associated receivables. Our unique product is the leading choice, particularly for law firms looking for legal billing software, and large scale organisations looking for an invoice management system capable of handling large amounts of invoices, regularly.
In fact, businesses and law firms using CreditForce report a 50% improvement in collections team's productivity, as well as a 30% reduction in WIP and receivables levels.