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.
Work in Progress has different meanings depending on your business type. In manufacturing, WIP is inventory that has been partially processed - raw materials have been used and labour applied, but the product is not yet finished. It sits between raw materials and finished goods on the balance sheet. In service businesses (like law firms, agencies and consultancies), WIP represents time and costs incurred on client projects that have not yet been invoiced. This unbilled WIP is a current asset representing revenue that has been earned but not yet billed. Managing WIP is important for both cash flow and profitability. High WIP in a service business means you have done work that you have not yet been paid for - accelerating billing converts WIP to receivables and ultimately to cash. In Xero, WIP can be tracked through manual journals or specialised project management integrations. SortBooks helps monitor WIP levels by tracking project-related expenses and identifying unbilled work that should be invoiced.
SortBooks helps with the bookkeeping behind work in progress (wip) 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 work in progress (wip) 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.
Inventory refers to the goods your business holds for sale or uses in production. It is a current asset on the balance sheet and its cost flows to COGS when sold.
Current assets are resources your business expects to convert to cash, sell or consume within 12 months. They include cash, accounts receivable, inventory and prepaid expenses.
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.
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.
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.