WIP & Accruals Overview
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WIP & Accruals Overview

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WIP, Accruals and Pre-billings

The WIP and Accruals process manages the way that revenue is recognised in JobBag. The basic concept is that you match billings and costs in the same period so you report an accurate profit.

Where the costs and billings happen in the same period, you will automatically report the correct profit, but if you incur the costs in one period and bill the client in another period, you will report a loss in the period where the costs are incurred and report a profit in the period where the billings are reported. Neither period would be correct - the WIP and Accruals process removes this type of distortion and reports a more accurate profit.

The scenarios that JobBag looks after are:

Pre-billings: If you bill your client 50% up front as a deposit or if perhaps your client has asked you to bill them early as they have some budget left over that they don’t want to lose, but you haven’t yet done the work, you shouldn’t have all those billings as profit until you have done the work. Pre-billings allows you to push some or all of those billings into a future period, and keep doing that till the job is complete. So if you have billed $50,000 but have only done $10,000 worth of work, use Pre-billings to move $40,000 to a future period.

Accruals: If you have invoiced a client for some printing, but you haven’t received the invoice from the supplier, you don’t want to overstate your profit in the period when you billed the client, only to take a big loss when the supplier invoice comes in. Assuming that you send PO’s to your suppliers, when you do WIP and accruals, JobBag will accrue any open PO dated prior to the month end so that the costs are accounted for in the same period as the billings.

WIP costs: You have incurred some costs that you will eventually charge to the client, but not this month. JobBag takes those costs out of the P&L and puts them in the Balance Sheet, ready to be used in a future period, so that you wont take a hit on your profit until you are able to match it with billings to the Client.

Accrued revenue: You have generated value on a job but you have not billed it to the client this month. You want to recognise the value that you have generated as revenue. With the Accrued Revenue settings turned on, JobBag will accrue the value as revenue in this month, and reverse it next month.

Time-WIP Costs: You have generated value through timesheets on a job but have not billed it to the client yet. You intend to bill it next month, but you want to match the timesheet cost with the billings next month. With the time WIP Costs settings turned on, JobBag will take up the timesheet cost (not the value) as WIP Costs in the Balance Sheet this month and reverse it next month. This will allow you to match the timesheet costs with the billings in the same month.

WIP and Accruals is an automatic process. It evaluates all costs and billings on every job and automatically calculates:

•whether costs should be taken up as WIP

•if an accrual is required if there are billings on a job

•pre-billings where the work hasn’t been performed

•time WIP where time has not been billed to the client and recognises WIP value as Accrued Revenue.

•accrues value as revenue according to the settings in the WIP Settings window.

You will use the The WIP & Accrual Setting to have JobBag calculate the above based on the way your business works.

The WIP & Accruals window allows you to review and adjust the decisions that JobBag has made and confirm (i.e. agree on the calculations) and


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