The accounting glossary
What is WIP in an accounting firm?
WIP, or work in progress, is a measure of work performed on a job that has not yet been billed in a firm’s billing records. In practice-management reporting, recorded hours can be valued at a position’s rate. This operational measure is different from cash collected, an invoice or accounting profit.
The short answer
A time-based WIP amount adds each person’s recorded hours multiplied by the applicable rate. Comparing that amount with a job budget helps identify work consumed against the planned fee. The comparison is meaningful only when the hours, rates, period and billing status are consistent. Missing time records mean incomplete information, not free work or a proven profit.
Work performed, billed and collected are different measures
| Measure | What it tells you |
|---|---|
| Hours | Time recorded on the job |
| Time valued at rates | A management value for that recorded work |
| Budget | The amount used for the job comparison |
| Billed amount | What the firm has invoiced |
| Collected amount | Cash received from the client |
Scroll the table if needed.
A fictional 17-hour job
With an illustrative budget of $3,000, the recorded work is $160 below that budget. The result says nothing yet about unrecorded hours, work remaining, the fee finally billed or cash collection. If another two hours are expected, the reviewer should consider them before drawing a conclusion.
| Position | Hours | Illustrative rate | Value |
|---|---|---|---|
| Senior | 12 | $150 | $1,800 |
| Supervisor | 4 | $200 | $800 |
| Manager | 1 | $240 | $240 |
| Total | 17 | — | $2,840 |
Scroll the table if needed.
Budget headroom is not profit
A rate used to value work is not necessarily the cost of employing the person. A budget-minus-work comparison therefore cannot be read as a complete profit calculation. Salaries, overhead, write-offs, additional work and the final billing decision all belong in a wider profitability analysis.
Before comparing dossiers, check whether rates changed during the period and whether the team has recorded its time. Separate missing data from a genuine zero. When a fixed-fee job spans several months, compare like-for-like periods and explain whether the amount refers to total recorded work or remaining unbilled work.
How to read the WIP view in Tax Workflow
Tax Workflow values the hours entered on a job at position rates and compares that value with the budget. The portfolio view helps the team examine dossiers by client and season. Use the figures to ask concrete questions about work remaining, time completeness and the causes of an overrun.
A built-in timer and recorded job hours are distinct sources of information. The job’s WIP follows the hours recorded for it. Treat the software figure as a management reading, then reconcile it with the firm’s billing and accounting records when assessing unbilled work.
Common questions
Does WIP mean profit?
No. It measures work value. A full profit assessment also needs the actual fee, costs and other relevant information.
Can no recorded hours mean zero WIP?
It can produce a zero in a calculation, but it does not prove that no work occurred. First check whether time records are complete.
Is WIP valued the same way in statutory accounts?
Not necessarily. A management rate and an accounting valuation have different purposes. Apply the relevant accounting framework separately.
Sources for further reading
Dated source checks do not replace review by the professional responsible for your engagement.
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