WIP & Accruals Overview(New)

WIP & Accruals Overview

WIP, Accruals and Pre-Billings in JobBag

The WIP and Accruals process in JobBag controls how revenue and costs are recognised so that profit is reported accurately in each accounting period.

The key principle is matching revenue and costs in the same period.

• If costs and billings occur in the same month, profit is reported correctly automatically.

  If costs occur in one period and billings occur in another, profit will be distorted:

  • A loss is reported when costs are incurred.
  • A profit is reported later when the billing occurs.

The WIP and Accruals process removes this distortion, ensuring profit reflects the true performance of your jobs.

Scenarios Managed by JobBag

1. Pre-Billings

Pre-billings occur when a client is invoiced before the work is completed.

Examples:

• A 50% upfront deposit
• Early billing due to client budget constraints

If you bill $50,000 but have only completed $10,000 worth of work, recognising the full amount as profit would overstate results.

How JobBag handles this:

• The completed portion ($10,000) is recognised as revenue.
• The remaining $40,000 is deferred to future periods using Pre-Billings.
• This continues until the job is completed.

2. Accruals

Accruals ensure costs are recognised in the same period as related billings.

Example:

• You invoice a client for printing.
• The supplier invoice has not yet been received.

Without accruals, profit would be overstated in the billing month and understated later when the supplier invoice arrives.

How JobBag handles this:

• Open purchase orders (POs) dated before month-end are accrued automatically.
• Costs are recognised in the same period as the client billing.

3. WIP Costs

WIP Costs occur when you incur costs that will be billed to the client in a future period.

How JobBag handles this:

• Costs are removed from the Profit & Loss.
• They are held on the Balance Sheet as WIP.
• The costs are recognised only when matching billings occur.

This prevents profit from being reduced before revenue is earned.

4. Accrued Revenue

Accrued Revenue applies when work has been completed, but the client has not yet been billed.

How JobBag handles this:

• The value of work performed is recognised as revenue in the current period.
• The revenue is reversed in the following period when billing occurs.

This allows revenue to reflect work completed, even if invoicing is delayed.

5. Time-WIP Costs

Time-WIP applies to unbilled timesheets.

Scenario:

• Staff have submitted timesheets this month.
• Billing will occur next month.

How JobBag handles this:

• The cost of the time (not the value) is recorded as WIP on the Balance Sheet.
• It is reversed in the following period.
• This allows timesheet costs and billings to be matched in the same month.

Automatic Processing in JobBag

WIP and Accruals in JobBag is an automatic process. For every job, JobBag evaluates all costs and billings and determines:

• Whether costs should be treated as WIP
• Whether accruals are required when billings exist
• Whether pre-billings apply where work is incomplete
• Whether time should be treated as Time-WIP
• Whether revenue should be accrued based on your settings

WIP & Accrual Settings

The WIP & Accrual Settings window allows you to configure how JobBag applies these rules based on how your business operates.

The WIP & Accruals window then allows you to:

• Review JobBag’s calculated decisions
• Make adjustments where required
• Confirm (agree to) the calculations before posting