A work-in-progress (WIP) report shows, for every active job, how much of the work is complete, how much revenue has been earned, and how that compares to what has been billed. Read correctly, it reveals which jobs are healthy, which are quietly losing money, and which are borrowing from tomorrow.
Most contractors produce a WIP because the bank or the bonding company asks for one. The contractors who get the most out of it are the ones who read it for themselves first.
What are the columns on a WIP report?
A standard WIP report carries, for each job: the contract value including approved change orders, the estimated total cost, cost to date, percent complete, earned revenue, billings to date, and the over- or underbilled position. The last column is where most of the story lives.
The math connecting them is straightforward. Percent complete is usually calculated cost-to-cost, the most widely used progress measure under current revenue recognition standards: cost to date divided by estimated total cost. Earned revenue is that percentage applied to the contract value. Comparing earned revenue to billings to date produces the over- or underbilling.
A worked example makes it concrete. Take a mechanical contractor’s plant retrofit: contract value $1,200,000, estimated cost $1,000,000, cost to date $600,000. The job is 60% complete, so earned revenue is $720,000. If billings to date are $800,000, the job is overbilled by $80,000. If billings were only $650,000, it would be underbilled by $70,000. Same job, same progress, two very different conversations.
Every number in those columns is only as reliable as the job costing underneath it. The complete guide to job costing covers that foundation, from cost code structure to committed costs and forecasting.
🔎 What does it mean when a job is overbilled?
Overbilled means the contractor has billed ahead of the revenue actually earned. On the balance sheet it appears as a liability, billings in excess of costs and estimated earnings, because the customer has paid for work that has not been performed yet.
Moderate overbilling is normal and often deliberate. Front-loading the schedule of values funds mobilization and keeps the job cash-positive, which is simply good billing practice. However, an overbilled position is borrowed money in a real sense: the remaining work must be completed with less remaining billing to fund it. A heavily overbilled job late in its life is a job where the cash has already been collected and, in many shops, already spent on the next job. That is the pattern lenders call job borrow, and it is how a contractor can be profitable on paper and still run out of cash.
🔎 What does it mean when a job is underbilled?
Underbilled means earned revenue exceeds what has been billed, shown as an asset: costs and estimated earnings in excess of billings. It has two possible causes, and telling them apart is the single most important judgment call in reading a WIP.
The first cause is benign: a billing lag. The work was done late in the period and the pay application simply has not gone out yet. That underbilling clears next cycle.
The second cause is the dangerous one. The underbilling is not really an asset at all; it is a cost overrun that has not been admitted yet. Costs have run ahead of the billing schedule because the job is taking more labour and material than estimated, and the “earned revenue” is inflated by an estimated total cost that no one has updated. Unapproved change orders are the classic version: the crew performed the extra work, the costs posted, but the change order was never approved, so there is nothing to bill against. A persistent underbilling that does not clear over two or three periods is rarely a billing lag. It is usually a job telling you its estimate is wrong.
🔎 What does profit fade look like on a WIP report?
Profit fade is a job’s estimated final margin shrinking as the job progresses. On a WIP report it shows up by comparison: this month’s estimated gross profit on a job against last month’s and the original estimate. A job that bid at 12%, showed 9% at midpoint, and shows 6% now is fading, and the trend matters more than any single number.
One fading job is a project problem. Fade appearing across several jobs is an estimating or cost-control problem, and it is exactly the pattern a surety underwriter scans a comparative WIP for. The reverse pattern, profit gain, draws scrutiny too, since consistently sandbagged estimates make every interim statement unreliable. The credibility target is estimates that hold, not estimates that surprise pleasantly.
Why do banks and sureties read your WIP so closely
Because the WIP schedule is where a contractor’s real financial position lives. The income statement can look healthy while the WIP shows heavy job borrow, persistent underbillings, and fading margins. Lenders and bonding companies read the WIP to see what the financial statements have not admitted yet.
The stakes are the same ones that apply to a contractor’s statements generally: sureties typically require CPA-reviewed or audited financials for larger bond programs (Doeren Mayhew), and in Canada a review engagement is typical once a performance bond facility exceeds $1 million (FCA Insurance). The WIP schedule is a core exhibit in that package on either side of the border. A WIP that arrives late, changes shape between versions, or contradicts the general ledger costs a contractor credibility at exactly the moment bonding capacity is being set.
Conversely, a contractor who walks into a bonding review with a current, consistent WIP that ties to the books is making the underwriter’s job easy, and underwriters remember who does that. (For how statement requirements and multi-company structures interact with bonding, see multi-entity accounting for contractors.)
How Jonas produces the WIP
In Jonas, the WIP schedule is a report, not a month-end project. Because job costs, billings, and the general ledger share one dataset, percentage-of-completion revenue recognition updates automatically as costs post to the job, and a controller can pull a current WIP showing over- and underbilled positions across every active project on demand rather than building one in Excel.
The inputs stay current for the same reason. Field labour posts to job cost codes the same day it is approved, and purchase orders commit cost against the budget the moment they are issued, so the cost-to-date and cost-to-complete figures behind the WIP reflect what the job actually looks like today. When the bank or the surety asks, the answer is a report run, not a rebuild, and it ties to the ledger because it comes from the ledger.
See your WIP as a live report. Book a demo with a Jonas specialist.
Frequently asked questions
How often should a WIP report be updated?
Monthly is the practical minimum, since a WIP older than the current period hides exactly the trends it exists to reveal. Sureties and lenders typically expect a WIP schedule with each financial reporting package. Internally, the more useful standard is on demand: a WIP that can be pulled any day is a management tool, while a WIP that takes a week to build is only a compliance document.
How do change orders show up on a WIP report?
Approved change orders increase the contract value and, usually, the estimated cost, so the job’s percent complete and earned revenue recalculate. Unapproved change orders are the trap: the costs post but the contract value does not move, which manufactures an underbilling. Many contractors list pending change orders as a memo column on the WIP so reviewers can see how much of an underbilling is explained by paper still in process.
Do committed costs belong on a WIP report?
Cost to date only includes costs actually incurred, so open purchase orders and subcontract commitments do not sit in the percent-complete math. They belong in the estimated cost to complete: a forecast that ignores an issued $80,000 purchase order is wrong by $80,000. A WIP built from a system that tracks committed costs will show fade months before one built from invoices alone.
Is there a healthy amount of overbilling or underbilling?
There is no universal number; project mix, billing terms, and timing all move it. The pattern matters more than the level. Modest overbillings that fund mobilization and clear as jobs close are routine. Persistent or growing underbillings across the schedule are what draw questions from reviewers, because that pattern usually means unapproved change orders or unadmitted cost overruns rather than billing lag.
Can a job be overbilled and still be losing money?
Yes, and it is one of the more dangerous combinations. Overbilling describes the relationship between billings and earned revenue; profitability depends on the estimate holding. A job can be billed well ahead of progress while its costs quietly run past the estimate, which means strong cash flow today and a loss at closeout. The overbilled cash masks the problem, which is why the estimated final margin column deserves as much attention as the billing position.
