A Work in Progress (WIP) report shows the value of unbilled time and costs accumulated on client projects, helping service businesses manage billing and cash flow.
The WIP report is essential for service businesses (like law firms, accounting practices, agencies and consultancies) that bill for time and project-based work. It shows the accumulated time and costs on each project that have not yet been invoiced to the client. High WIP balances represent work you have done but not yet been paid for - essentially an interest-free loan to your clients. Managing WIP effectively involves regular review of accumulated amounts, timely billing for completed milestones or time periods, clear policies on WIP write-offs (for time that cannot be billed) and monitoring WIP ageing (how long work sits unbilled). The WIP report should be reviewed at least weekly for active practices. Common metrics include total WIP value, WIP as a percentage of revenue, average WIP age and WIP recovery rate. SortBooks helps manage WIP by tracking project-related costs in Xero and flagging projects with accumulating unbilled amounts that should be invoiced.
SortBooks helps with the bookkeeping behind wip report by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing wip report by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
WIP represents partially completed goods in manufacturing or unbilled time and costs in service businesses. It is a current asset reflecting the value of work not yet available for sale or billing.
Accounts receivable (AR) is the money owed to your business by customers who have purchased goods or services on credit. It is a current asset on your balance sheet.
Revenue recognition determines when and how revenue is recorded in your financial statements. Under accrual accounting, revenue is recognised when earned, not necessarily when cash is received.
Cash flow is the movement of money in and out of your business. Positive cash flow means more money coming in than going out. It is often considered more important than profit for business survival.
Profitability measures your business's ability to generate profit from its operations. Key metrics include gross margin, operating margin, net margin and return on equity.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.