WIP Reporting for Construction — Work-in-Progress Schedules That Banks, Bonding Companies & CPAs Actually Trust
Updated April 2026 · Reviewed by Cory Salisbury, Construction Financial Specialist
A Work-in-Progress (WIP) schedule compares the percentage of costs incurred to the percentage of revenue billed on each active construction project, revealing whether you're overbilled (collected more than earned) or underbilled (earned more than collected). Salisbury Bookkeeping prepares monthly WIP schedules for contractors earning $500K–$10M using percentage-of-completion accounting, giving you accurate profit recognition and financial statements that satisfy banks, bonding companies, and CPAs.
What Is a WIP Schedule?
A Work-in-Progress (WIP) schedule is a construction accounting tool that measures the financial health of individual projects by comparing costs incurred to revenue earned on a percentage-of-completion basis. Unlike cash accounting, which records transactions when money changes hands, WIP uses accrual accounting to match revenue with actual project progress.
How WIP Works
WIP operates by calculating a completion percentage for each project, then applying that percentage to both costs and revenue:
- Completion % = Costs to Date ÷ Estimated Total Costs (or engineer's estimate)
- Revenue Earned = Completion % × Contract Amount
- Revenue Billed = Amount Actually Invoiced to Client
- Over/Under Billed = Revenue Billed − Revenue Earned
Overbilled vs. Underbilled: What It Means
Overbilled: You've collected more money from the client than you've actually earned based on project completion. This is revenue you'll eventually "own" as you finish the work, but it's a liability until earned. Example: You've billed $500K but only completed 60% of the work (earning $300K). You're overbilled by $200K.
Underbilled: You've completed work worth more than you've invoiced. This is revenue you've earned but haven't yet collected. Example: You're 75% complete (earning $375K) but have only billed $300K. You're underbilled by $75K — money owed to you that should be in a future invoice.
Why WIP Matters for Your Construction Business
WIP reporting reveals your true project profitability. A contractor might appear profitable on a P&L statement but actually be running losses on individual projects. WIP catches cost overruns early, highlights projects at risk, and ensures your financial statements reflect reality — not just the timing of payments.
For contractors with multiple active projects of varying durations, WIP is the only way to accurately measure profit at month-end, quarter-end, and year-end. It's the standard accounting method required by banks, bonding companies, and the IRS for contractors exceeding certain revenue thresholds.
WIP Schedule vs. Regular P&L
A regular P&L statement can mislead contractors. It records revenue when billed and expenses when paid, ignoring how much of each project is actually complete. Here's a real-world example:
| Metric | What P&L Shows | What WIP Reveals |
|---|---|---|
| Revenue Billed | $500,000 | $500,000 |
| Costs Incurred | $400,000 | $400,000 |
| P&L Profit (appears) | $100,000 | — |
| Project Completion % | Unknown | 60% |
| Estimated Total Cost | Unknown | $666,667 |
| Revenue Earned (60% of contract) | — | $300,000 |
| WIP Over/Under Billing | — | Overbilled $200,000 |
| Actual Profit When Done | $100,000 (false!) | Loss or thin margin likely |
The lesson: Without WIP, you thought you made $100K profit. With WIP, you know you're 40% through a project with most costs ahead. Your "profit" might evaporate. This is why banks and bonding companies insist on WIP reporting — the P&L alone tells them nothing about real project health.
Sample WIP Report
Here's what a month-end WIP schedule looks like. This is the format Salisbury Bookkeeping prepares for contractors earning $500K–$10M:
| Project Name | Contract Amount | Costs to Date | Est. Total Cost | % Complete | Revenue Earned | Revenue Billed | Over/(Under) Billed |
|---|---|---|---|---|---|---|---|
| Downtown Office Retrofit | $2,500,000 | $1,200,000 | $2,200,000 | 54.5% | $1,362,500 | $1,400,000 | $37,500 |
| River Valley Industrial | $1,800,000 | $1,575,000 | $1,800,000 | 87.5% | $1,575,000 | $1,500,000 | ($75,000) |
| North Park Subdivision Ph 2 | $3,200,000 | $960,000 | $3,000,000 | 32.0% | $1,024,000 | $800,000 | ($224,000) |
| Millcreek Commercial Complex | $950,000 | $712,500 | $950,000 | 75.0% | $712,500 | $750,000 | $37,500 |
| TOTAL | $8,450,000 | $4,447,500 | $7,950,000 | 56.0% | $4,674,000 | $4,450,000 | ($224,000) |
What this tells you:
- Overall you're 56% complete across active projects
- You're underbilled by $224K — you've earned revenue you haven't yet invoiced
- River Valley is underbilled ($75K owed on next invoice)
- North Park is significantly underbilled ($224K) — worth a mid-project change order review
- You're on track to recognize ~$4.67M in revenue this period, not the $4.45M you've billed
Who Needs WIP Reports
Banks & Lenders
Banks financing construction operations or projects require monthly or quarterly WIP reports. They use WIP to verify contractor capacity, assess project risk, and determine borrowing limits. WIP shows whether you're truly profitable or overbilling to mask losses.
Bonding Companies
Surety bonding companies (performance, payment, and bid bonds) mandate WIP reporting as part of your financial requirements. They calculate bonding capacity based on WIP—specifically, how much overbilling you're carrying and how healthy your backlog projects are.
CPAs & Tax Preparation
Contractors using percentage-of-completion accounting for tax purposes must have accurate WIP schedules. The IRS requires WIP-based revenue recognition for long-term contracts. Without monthly WIP, your CPA can't file an accurate tax return or identify deferred revenue liabilities.
Construction Owners
If you're a construction company owner, you need WIP to understand true profitability. Cash profits can hide project losses. WIP tells you which projects are earning money and which are draining it, allowing you to adjust estimates, pricing, and operations.
Accountants & Controllers
Your internal accounting team uses WIP to close the books accurately each month, prepare financial statements, and manage cost overruns. WIP is the backbone of construction accounting—without it, you're flying blind.
Contractors Earning $500K–$10M
Mid-market contractors with multiple active projects spanning weeks or months absolutely need WIP. Cash-basis or simple accrual accounting fails at this scale. WIP is non-negotiable for compliance, profitability, and credibility with stakeholders.
How Salisbury Bookkeeping Builds Your WIP
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Data Collection
We pull your accounting data from QuickBooks Online, including contract amounts, costs incurred, and billing history. We also request project completion estimates and total cost projections from your field teams, project managers, or estimating software.
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Completion Calculation
Using your actual costs to date and estimated total costs, we calculate each project's completion percentage. We use cost-to-cost or units-of-delivery methods based on your project type and contract terms.
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Revenue Recognition
We apply the completion percentage to your contract amount to determine revenue earned. We compare that to revenue billed to calculate whether you're overbilled or underbilled on each project.
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Monthly WIP Schedule
We prepare a detailed WIP schedule showing all active projects, their completion status, and over/under billing. This becomes your month-end revenue adjustment and feeds into your financial statements.
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CPA-Ready Format
Your WIP is formatted for immediate use by your CPA or tax preparer. It supports percentage-of-completion tax filings and provides the detail your auditors or lenders need to verify financial statements.
Timeline: We prepare WIP schedules monthly, typically within 3–5 business days of your accounting close. As your bookkeeper, Salisbury integrates WIP into your monthly accounting routine, not as an add-on.
What Happens Without WIP Reporting
Tax Surprises at Year-End
Without WIP, your CPA files your tax return using cash basis or incomplete accrual accounting. When the IRS audits, you're unprepared for percentage-of-completion requirements. Amended returns, penalties, and interest can follow.
Bonding Capacity Issues
Bonding companies can't assess your financial capacity without WIP. Your bond limits stay artificial or get reduced, limiting contract pursuit. Major projects require surety bonds—without WIP clarity, you lose opportunities.
Bank Loan Rejection or Scrutiny
Construction lenders require WIP as a condition of financing. Without it, your loan application stalls, you're denied credit lines, or interest rates spike. Banks see WIP-free contractors as financially opaque—a red flag.
False Profitability
You think you're making 15% margins. WIP reveals you're actually losing money on half your projects. Cost overruns hide in incomplete work. By the time projects finish, profit is gone—and you're scrambling to adjust pricing or cut costs mid-stream.
Missed Change Order Revenue
Without WIP tracking over/under billing, you miss legitimate change order opportunities. Projects that are underbilled by thousands go unaddressed until it's too late to invoice.
Financial Statement Credibility
A contractor P&L without WIP is suspect. Accountants, investors, or advisors question the numbers. You can't confidently present financials to stakeholders or use them for decision-making.
Frequently Asked Questions About WIP Reporting
A Work-in-Progress (WIP) schedule compares the percentage of costs incurred to the percentage of revenue billed on each active construction project. It reveals whether you're overbilled (collected more than earned) or underbilled (earned more than collected). Contractors need WIP schedules to recognize accurate profit, satisfy banking and bonding requirements, and ensure tax compliance under percentage-of-completion accounting. For contractors earning $500K–$10M, WIP is essential to understand true project profitability and maintain credibility with stakeholders.
A regular P&L shows cash-basis profit, which is misleading for long-term construction projects. A P&L records revenue when billed and expenses when paid, regardless of project completion. WIP uses percentage-of-completion accounting to match revenue earned with costs incurred on each project, not just what's been billed and paid. A project might show $100K profit on the P&L but actually be losing money once all estimated costs are factored in. WIP reveals the truth.
Banks require WIP for construction loans to verify true profitability and assess lending risk. Bonding companies mandate WIP to determine contractor capacity and financial stability—your bond limits are based on WIP overbilling and project health. CPAs need WIP for tax returns filed under the percentage-of-completion method, especially for contractors above IRS thresholds. Construction owners use WIP to understand true project profitability and identify cost overruns early. Accountants and controllers depend on WIP to close the books accurately each month.
WIP schedules should be prepared monthly, coinciding with your accounting close. Monthly WIP gives you real-time visibility into project health, helps identify cost overruns early, and ensures financial statements and tax filings are accurate. Some contractors with very active or risky projects prepare WIP weekly or bi-weekly, but monthly is the standard for mid-market contractors. Salisbury prepares WIP monthly as part of your standard bookkeeping service.
Salisbury pulls data from QuickBooks Online including contract amounts, costs to date (broken down by project), and payment history. We also request estimated total costs and completion percentages from your project management tools, field teams, or estimating software. The more accurate your cost tracking and project data, the more reliable your WIP. If costs are mixed across multiple projects or not coded properly in QBO, we'll work with you to segment them correctly.
Without WIP reporting, you risk tax surprises at year-end (IRS compliance issues), bonding capacity disputes (limiting your ability to bid large projects), bank loan rejection or increased scrutiny (hampering your ability to finance operations), and false profitability that masks real project losses. Construction contractors earning $500K–$10M cannot reliably measure profit, meet stakeholder requirements, or make informed business decisions without monthly WIP schedules. It's a non-negotiable best practice.
Ready to Get Accurate WIP Reporting for Your Construction Business?
Salisbury Bookkeeping prepares monthly WIP schedules designed for contractors earning $500K–$10M. We handle the data pull, calculations, and formatting—so you get bank-ready, CPA-ready WIP that satisfies lenders, bonding companies, and tax requirements.