The WIP report is one of the most valuable reports that a construction company has. Also known as a Work In Progress report, this tool allows management to identify potential cash flow issues, project progress, and the overall trajectory of their projects. But these reports are tough to maintain and require constant updates. And here’s a hint: that spreadsheet won’t cut it.
This guide will explain what WIP reporting is and the benefits that construction management software can offer.
What is a WIP Report?
A WIP report, or Work in Progress report, is a document used to detail a company’s current profitability on a project quickly. It tracks the amount of money expended on the project, the amount billed, and the amount still required and compares it against the contract total.
Most companies use spreadsheets to complete their WIP reports, which means there isn’t a standard template. However, most WIP reports contain the following information:
- Project name and identifying information
- Total contract value sold on the project
- Estimated cost at completion
- Estimated profit
- Pending Change Orders
- Amount Billed
- Job progress percentage
- Over/Under budget amounts
These reports can contain data from all of the company’s projects, different aspects of one large project, or simply just one project.
WIP reports are essential (and even required by the IRS) on large, long-term projects. They’re also incredibly valuable during progress billing contracts. They help the contractor identify if there are cash flow issues before they become too large to overcome. But, that’s only if the reports are maintained correctly—and that’s pretty hard to do with a standard spreadsheet.
The Benefits of Using Premier Construction Software for WIP Accounting
WIP reports aren’t explicitly construction-specific reports. Many industries use these reports to track the process of bringing a product through the manufacturing process. For this reason, there are lots of different WIP report types and templates. But, using software designed specifically for construction can help simplify the process. The following are some of the most significant benefits of using construction software for WIP accounting.
Customized WIP Reports
Most construction companies would prefer to see the same data on their WIP reports: total amount, amount billed, amount expended, and current over or underbilling. However, there may be specific values they don’t need to see or other matters they’d like to track. Premier allows users to customize the values they see or track on their reports.
Beyond the individual values, our software will also allow users to quickly generate WIP reports for all, several, or just one of their projects. They can get a quick overview of their company’s cash flow with a general report or drill down into each project to identify the cash flow challenges they may be facing. They’ll then be able to address the issues with those projects in less time than it would take for them to assemble a complete report.
One of the challenges of maintaining WIP reports with standard spreadsheets is keeping them updated. Each invoice or change order that comes in will effectively change the WIP report, and without someone constantly updating the report, it won’t reflect the true status of cash flow and progress on the project.
But with Premier Construction Management Software, keeping up with the latest data isn’t a problem. Our software allows for electronic payments and approvals, meaning any payments going in or out as well as any potential profit changes are automatically tracked in the system. Any values those payments impact will automatically update across multiple reports, including the WIP, ensuring the data is always up to date in real-time.
WIP reports bring two parties together: project management and the accounting staff. Both parties need to watch these reports carefully to ensure that the project is on track and remains profitable. Unless that document is easily available to both parties at the same time, communication becomes a challenge.
A software like Premier, which is designed for construction can simplify the communication process. Our reports are cloud-based and easily accessible by project management and accounting staff. Both parties can be looking at the same WIP report at the same time, and since the system updates the report automatically, they’re sure that the data is up to date. Any questions or concerns they have can be expressed and discussed in real time because the software ensures everyone is on the same page.
Manually updating spreadsheets and subsequent reports is a recipe for disaster. Every data point entered by a person is an opportunity for human error, meaning values might not jive and the reports generated might not be accurate. For this reason, contractors can never be entirely sure that the WIP report they’re looking at is full-proof and accurate, and just one decision based on bad data can be disastrous.
Using our software won’t remove every chance for error (a human has to input the original data, after all), but it can help reduce mistakes drastically. Since our software will automatically update values affected by the latest data, there won’t be any forgotten changes, misplaced decimal points, or mathematical errors. This helps contractors make the best decisions possible by knowing the data is accurate.
Correct Cash Flow Issues Before They Become Severe
Construction is a cash-hungry business, and tracking cash flow is essential to staying on top. That is the point of a WIP report in the first place. However, when it’s a spreadsheet that is updated infrequently, cash flow issues can become severe before anyone notices them.
With an automatically updating, accurate WIP report generated by software like Premier, users can identify cash flow issues when they’re small enough to correct. As project progress continues and management recognizes they’ve underbilled, they can send an invoice to get things back on track. And, since many of these programs can be customized to send budget warnings, project management might be able to get ahead of a budgetary issue before even checking the WIP report.
WIP reports are some of the only reports the average investor even cares about. These reports tell them where the project is headed, how much money it will make, and where it stands from a cash flow standpoint. They want these reports to be simultaneously comprehensive and simple to understand.
Premier can do just that. With the ability to instantly generate a report, project managers can show investors exactly what they want to see and when they want to see it. And, since the data is accurate, those stakeholders will be able to make better decisions in less time, making them happier with the project and contractor involved.
Let Premier Construction Software Simplify Your WIP Reports
With reports this important, does it make sense to take a chance with a spreadsheet? Improve cash flow & communication while reducing errors with Premier Construction Management Software. Let us simplify the WIP process while offering real-time data that you and your investors can rely on.