WIP Reports in Construction: The Key to Clear Financials

Why Work in Progress Reports Matter

For many general contractors and construction companies, keeping up with costs and billing cycles is one of the toughest parts of the job. Expenses such as labor, subcontractors, equipment, and materials change constantly, while invoices rarely line up with actual project progress. Without accurate visibility, it’s nearly impossible to protect profit margins or deliver reliable financial reporting.

That’s why contractors rely on a WIP report, a tool that helps them track progress across jobs and gain real-time visibility into costs.

What Is a WIP Report?

A work in progress report—sometimes called WIP accounting or construction in progress accounting—provides an accurate picture of active jobs by showing how much work has been completed, how much has been billed, and where project profitability stands.

A construction WIP report typically includes:

• Contract value

• Estimated costs and actual project costs

• Work completed and percentage complete

• Earned revenue

• Billings to date

• Projected profit margins

  

By updating the work in progress report regularly, contractors capture the latest costs incurred and project progress, making it a powerful tool for:

• Delivering clarity on project finances while jobs are still open

• Spotting cost overruns early

• Demonstrating compliance in financial statements

• Reducing billing disputes and protecting financial stability

Work in Progress in Construction

In construction, work in progress (WIP) means tracking all costs—labor, subcontractors, equipment, overhead, and actual project costs—for jobs that are underway but not finished.

For project managers, controllers, and executives, this visibility highlights:

• Value and work completed to date on every job

• Whether spending is aligned with project budget and estimated costs

• If billing reflects the project scope and progress

Without consistent WIP updates, profit margins erode and negative cash flow risks grow. A regularly updated WIP report gives leadership confidence in decision-making and keeps construction projects on track.

WIP Accounting: Revenue Recognition That Reflects Reality

WIP accounting ensures revenue and expenses are recognized as projects advance—not just when invoices go out.

This matters because billing rarely reflects reality:

• Overbilling – Revenue looks strong temporarily, but costs will catch up.

• Underbilling – Cash flow suffers, and jobs appear unprofitable even when they’re not.

WIP accounting corrects these distortions by showing earned value in real time. It tracks all the costs associated with each job and allows general contractors to:

• Compare actual project costs to total estimated costs

• Spot margin fade or cost overruns early

• Keep the balance sheet accurate by recording WIP as an asset until billing converts it to revenue

• Maintain compliance with GAAP and ASC 606

Two approaches shape revenue recognition:

• Completed contract method – Revenue and expenses are recognized only at project completion

• Percentage of completion method – Revenue and expenses are recognized as the job progresses, based on percentage complete

The percentage method is often considered a truer reflection of financial performance because it ties reporting directly to the project lifecycle.

Construction in Progress Accounting on the Balance Sheet

On the balance sheet, construction in progress accounting acts as a holding area for job costs until the project is complete. This account captures:

• Labor charged to each job

• Subcontractor and equipment expenses

• Allocated overhead

When the project wraps up, these costs move into cost of goods sold, keeping financial reporting consistent across long construction projects.

Paired with detailed job cost data, construction in progress accounting provides transparency for financial statements and strengthens long-term financial performance.

How WIP Reports Strengthen Construction Financial Health

For contractors managing multiple projects, keeping track of costs isn’t just about profitability—it’s about maintaining overall financial health. A WIP report shows the financial status of ongoing projects, giving leaders confidence in their construction accounting practices.

These reports tie directly into ERP systems by connecting  job costs with the general ledger and accounts payable. By feeding real-time data into the system, contractors ensure that financial statements reflect the true position of the company.

WIP reports also help project management teams make smarter decisions. By comparing total estimated costs to actuals, project managers and CFOs can recognize revenue accurately and make better calls for long-term project finances.

Common Challenges in Managing WIP

While WIP reporting delivers critical visibility, managing it effectively is not always easy. Construction projects are dynamic, with costs, schedules, and billing cycles shifting constantly. Common challenges include:

• Revenue recognition rules – WIP is tied to compliance, especially under the percentage of completion method

• Project delays – Longer timelines extend WIP, delaying recognition and affecting the balance sheet

• Billing disputes – Without accurate WIP data, general contractors risk disputes and lost trust

• Transparency gaps – Poorly managed WIP can lead to bad decisions and weak reporting

• Negative cash flow – Underbilling and delays can push healthy jobs into a cash crunch

• Profit margins at risk – Inconsistent reporting makes it harder to keep jobs profitable

Accurate WIP reporting not only reduces disputes but also strengthens long-term financial stability for construction firms.

How Modern ERP Transforms WIP Reporting

Traditionally, creating WIP reports meant chasing spreadsheets and reconciling numbers manually. By the time the report was finished, it was outdated.

Modern cloud ERP like Acumatica automates the process, improving construction accounting and decision-making:

• Real-time updates – Costs, labor, and invoices flow into reports instantly

• Integrated accounting – WIP links with GL, AP, AR, and job costing

• Automated job cost reports – Compare estimated costs vs. actual project costs at any stage

• Mobile access – Field teams and project managers update data directly from the job site

• Compliance built-in – Reports align with GAAP, ASC 606, and industry standards

• Cost savings – Automating reporting reduces rework and manual reconciliations

Instead of being a burden, WIP reporting becomes a tool for protecting profit margins and ensuring leaders have reliable data to guide every decision.

Why WIP Reporting is Essential for Construction Firms

Whether you call it work in progress reporting, WIP accounting, construction in progress accounting, or simply a construction WIP report, the message is the same: the construction industry can’t afford to fly blind.

WIP reporting delivers a clearer, more accurate picture of project health—showing profit margins, project profitability, and compliance—while jobs are still in motion. It protects cash flow, strengthens forecasts, and keeps the balance sheet aligned with reality.

Contractors relying on spreadsheets risk errors, delays, and lost profits. Contractors running Acumatica ERP gain automated WIP reporting, reliable financial reporting, and total clarity across every project.

👉 Ready to simplify WIP reporting?
Contact Milestone to see how Acumatica automates WIP, connects job cost data, and delivers lasting confidence for general contractors and construction leaders.