BOOKKEEPING GLOSSARY · REVENUE, COST AND TIMING
Work in Progress (WIP)
Last Updated: October 5, 2026Work in progress is the value of work you have performed but not yet invoiced. In any project or job-based business it is the difference between monthly figures that mean something and monthly figures that simply follow your invoicing schedule.
Why It Exists
A contractor starts a job on 20 March and invoices on 10 April. Materials were bought, labour was applied, overhead was absorbed — all in March. The invoice is in April.
Without a WIP figure, March carries all the cost and none of the revenue, and April carries all the revenue and none of the cost. Two months are badly wrong in opposite directions, and the business reads them as performance.
Measuring WIP puts the accumulated value of unbilled work on the balance sheet at month end, so each month shows the activity that actually happened in it.
Where It Shows Up
Construction and trades, where jobs routinely straddle month ends.
Professional services — architects, engineers, agencies, law firms — where it is time recorded and not yet billed.
Manufacturing, where it is partially completed goods: materials issued, labour applied, not yet finished.
Long-cycle supply chains such as aerospace components, where the production cycle exceeds the reporting period so there is always substantial WIP.
What Goes Wrong
Never measured. Monthly results follow billing timing. The commonest state in trade and agency books.
Estimated once a year. Enough for a return; useless for managing.
Confused with over- and under-billing. WIP is unbilled work. Over-billing is where you have invoiced ahead of work performed — a liability, not an asset. A business doing progress billing has both, and lenders look for the pair.
Inflated by work that will never be billed. Written-off time, rework and non-chargeable hours do not belong in WIP. A balance that includes them overstates assets and delays a loss that has already happened.
Work in Progress (WIP) FAQs
What is the difference between WIP and under-billing?
They point the same way but are measured differently. WIP is the accumulated cost or value of work performed and not yet invoiced. Under-billing is the gap between revenue recognised on a measure of completion and the amount invoiced to date. A progress-billing business will have both, and lenders and bonding companies look for the pair.
Do service businesses need WIP?
If work straddles month ends, yes. For an agency, architect or law firm it is time recorded and not yet billed — and without it the monthly result follows when invoices went out rather than when work was done. Time that will never be billed must be excluded, or WIP overstates assets and hides a loss already incurred.
Related Terms
Months That Reflect the Work
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