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Understanding Standard WIP Reporting at MyBuilderCPA

Hi friends, I'm Jon Markee, founder and CEO of MyBuilderCPA, and today we're diving into the intricacies of standard WIP (Work In Progress) reporting. Despite the term "standard," WIP reporting is highly customized to meet the unique needs of each client. Here at MyBuilderCPA, our goal is to create a consistent and reliable template for your WIP reporting, tailored to your specific projects and requirements.

The Essentials of WIP Reporting

Our template starts with key metrics for your projects, illustrated with some sample data from a home builder managing 12 active jobs. The critical components of our WIP report include:

  1. Original Contract Price: The initial agreed-upon price for each job.

  2. Original Estimated Cost: The anticipated costs to complete the job, allowing us to calculate the expected profit and profit margin.

These foundational numbers set the stage for more detailed analysis as we track progress and make adjustments.

Factoring in Change Orders and Overages

Change orders and cost overages are integral to the WIP report:

  • Change Orders: We assess how change orders impact your profit margin and overall job performance.

  • Overages: For fixed bid contracts, we account for items that have exceeded the budget, adjusting our revised expected cost, profit, and profit margin accordingly.

Tracking Progress and Percent Complete

Accurate tracking of job progress is crucial:

  • Actual Costs to Date: The real-time costs incurred on each job.

  • Percent Complete: We calculate an estimated percentage based on your project schedule, but we need your input to verify or adjust this percentage to ensure accuracy.

Calculating Earned Revenue and Profit

With the percent complete verified, we can:

  • Calculate Contract Earned: Determine the revenue earned based on progress.

  • Compare Contract Earned to Contract Billed: Identify any overbilling or underbilling situations.

  • Determine Actual Earned Profit: Calculate the real profit earned, helping you understand how much of your cash flow is truly profit.

Collaboration is Key

Preparing an accurate WIP report requires collaboration between you and our team. While we provide the structure and initial estimates, your insights and real-time updates are essential for accuracy. Sharing files and maintaining open communication ensures we capture the most accurate financial picture of your projects.

Monthly WIP Reporting

To maintain the highest standards in your accounting, it’s crucial to prepare and review this WIP report at the end of every month. This ongoing analysis helps you stay on top of project financials, make informed decisions, and manage cash flow effectively.

If you have any questions about WIP reporting or how it can benefit your business, don't hesitate to drop a comment or reach out to me directly. Have a great day!

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