Contractor Finance Glossary
What is Work in Progress (WIP) Schedule?
Also called: WIP schedule, WIP report
A WIP schedule is a job-by-job report that compares how much of each contract you have earned (based on percentage of completion) against how much you have billed, revealing whether each job is overbilled or underbilled.
The WIP schedule is where contractor accounting and cash reality meet. For every open contract it lists contract value, cost to date, estimated cost to complete, percent complete, revenue earned, and amount billed. The gap between earned and billed is the story.
Underbilling means you have done work you have not invoiced yet, so you are financing the customer out of your own cash. Overbilling means you have billed ahead of the work, which flatters cash today and creates a hole later. Both are invisible on a standard P&L, which is why the WIP schedule is the contractor's most important management report.
How it is calculated
Earned revenue = contract value times percent complete, where percent complete = cost to date divided by total estimated cost. Underbilling (a current asset) = earned revenue minus amount billed; overbilling (a current liability) = amount billed minus earned revenue.
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