WIP & Accrual Process Settings(New)

WIP & Accrual Process Settings

This is the first and most important step in the WIP & Accruals process.

The settings you select determine how JobBag values WIP and generates month-end accounting entries.

Important: These settings should reflect how your business operates and how you want to match costs and revenue.

Accessing WIP Settings

Navigate to:

Ledger → WIP Settings

Understanding WIP Settings & Checkbox Decisions

Select the WIP settings that reflect how your business recognises revenue and costs.

Example Scenarios

Example 1 – Costs incurred but not yet invoiced

You have incurred external costs but have not invoiced the client.

• JobBag calculates the WIP value
• Costs are moved from the P&L to the Balance Sheet as an asset
• The entry is automatically reversed in the following period

Example 2 – Invoicing in advance (Pre-billings)

You invoice a client before work begins.

• Revenue is moved out of the P&L
• Recorded as a Pre-Billing liability
• Revenue is recognised progressively as work is completed

Key Terminology

Implied Costs

The calculated external cost of something invoiced to a client when no supplier cost exists yet.

Example:

• Client invoiced $1,500 for Printing
• Mark-up = 25%
• Implied cost = $1,500 ÷ 1.25 = $1,200

In-House Costs

Costs generated by:

• Timesheets
• Item charges

If no cost rates are set on Employees or Kinds, no in-house cost will be generated.

External Costs

Supplier costs entered as:

• Supplier invoices
• “Don’t Credit” payments

In-House WIP & Accrued Revenue

If enabled, JobBag allows you to decide how unbilled time is treated:

• Recognise cost as WIP, or
• Recognise value as Accrued Revenue

External WIP, Accruals & Pre-Billings

JobBag automatically manages three external scenarios:

1. Pre-Billings

Used when clients are billed before work is completed.

Example:

• Invoiced: $50,000
• Work completed: $10,000
• Pre-Billings moved to future periods: $40,000

Revenue is recognised progressively until the job is complete.

2. Accruals

Used when client billing exists but supplier costs have not yet been received.

• JobBag accrues open POs dated before month-end
• Accruals reverse automatically next month

⚠️ Important:

Avoid back-dating POs incorrectly.

A PO dated after month-end may not be accrued for that period.

3. WIP Costs

Used when costs are incurred but client billing will occur later.

• Costs are removed from the P&L
• Held as WIP on the Balance Sheet
• Recognised when matched with billings

Automatic Calculations

Automatically Write Off WIP by Job Type

Select job types that will never hold WIP value, such as:

• Internal projects
• New business / pitches
• Forecast jobs

These jobs:

• Are excluded from WIP processing
• Will not post values to the General Ledger

Limit Accruals to Billed Kinds

If enabled:

• JobBag accrues only supplier costs where the kind has been invoiced

⚠️ Be consistent with Kind usage

Example:

Client billed using kind PRT, supplier PO uses PRTG → JobBag treats these as different.

Automatically Accrue Implied Costs

If enabled:

• JobBag accrues costs implied by estimates
• Even if no PO or supplier invoice exists

Note:

Implied costs are accrued only when

“Pre-Billings – calculated manually” is selected.

JobBag will either:

• Accrue implied costs

  or

• Calculate pre-billings

  (not both)

Ignore Proposed Jobs

If enabled:

• Proposed jobs will not hold WIP values

Proportional vs FIFO Write-Ons / Write-Offs

Determines how write-ons and write-offs are allocated to transactions.

• Proportional: spread across all transactions
• FIFO: applied to the most recent transactions

WIP Level

Determines where JobBag calculates WIP.

• Recommended setting: Phase / Category
• Detailed review is still possible during confirmation

Income Recognition Models

Different businesses recognise income differently. Choose one model.

Pre-Billings Calculated Manually

• WIP Billings column is blank by default
• User manually decides pre-bill amounts per job
• Applies to all jobs

Income Recognised When Job Is Dead

• Revenue is treated as pre-billed until job is marked Dead
• Costs are also held as WIP until job completion

GL flow:

• Invoice raised → Income posted
• WIP run → Income reversed to Pre-Billings
• Job marked Dead → Final posting occurs

Can apply to:

1. All jobs
2. Most jobs
3. Some jobs

Invoiced vs Value (to Date)

JobBag compares:

• Invoiced amount
• Value of work completed

Example:

• Invoiced: $50,000
• Value completed: $30,000
• WIP Billings: $20,000

Calculated at kind level.

External Cost Treatment

Write External WIP Costs to the GL (Default)

• Accrues costs from un-invoiced POs
• Interacts with “Limit accruals to billed kinds”

Write External WIP Value as Accrued Revenue

Recognises unbilled value, not just cost.

Example:

• Supplier cost: $1,000
• Mark-up: 35%
• Unbilled value: $1,350

GL Entry:

• DR WIP (Balance Sheet) $1,350
• CR Unbilled Value (P&L) $1,350

In-House Costs Settings

Move In-House Costs from Overhead to Direct Expense

Allows timesheet costs to be treated as job costs.

Requires:

• Cost rates on employees
• Kind-level GL mapping
• Control account setup

Do Not Write In-House WIP to GL

Traditional approach:

• Unbilled time written to P&L monthly

Write In-House WIP Costs to GL

Recognises cost only as WIP.

GL Entry:

• DR WIP (Balance Sheet)
• CR Direct Costs (P&L)

Write In-House WIP Value as Accrued Revenue

Recognises value of time as revenue.

GL Entry:

• DR Unbilled Value (Balance Sheet)
• CR Accrued Revenue (P&L)

General Settings

Enable WIP as You Go

• Prompts WIP calculation when invoices are raised
• Reduces month-end workload
• Final results still appear in month-end WIP

Number of Jobs per Tab

Controls how many jobs appear in each WIP tab to make large reviews manageable.