The Short Version
I see over- and under-billing problems in roughly 70% of the builder financials I audit in depth. Builders aren't trying to misrepresent their position — they simply have no mechanism to compare earned revenue to billed revenue on jobs that are still active. A WIP schedule creates that mechanism. It usually reveals one of two problems: either the builder has been under-billing and is sitting on significant earned but uncollected revenue that doesn't show in QuickBooks yet, or they've been over-billing and have a liability on the balance sheet they haven't recognized. Neither situation is catastrophic if you catch it early. Both are serious if you don't.
Sound Familiar?
Signs you're operating without a WIP schedule:
- Your bank or bonding company has asked for a WIP schedule and you didn't know what they meant
- Your QuickBooks P&L looks profitable but your cash is perpetually tight
- You've been billing on calendar milestones rather than verified percentage-complete
- You closed a job and were surprised by how little profit remained after the final cost review
- You can't answer 'how much work is currently in progress' with a specific dollar number
What We Found
What WIP Measures — and Why It Matters More Than Your P&L
Your QuickBooks P&L shows revenue when you invoice and costs when you incur them. On a cash-basis construction business, it doesn't show you whether the revenue you've billed is actually earned based on how far the job has progressed. That's the WIP gap.
WIP tracks two numbers for every active job:
- Earned Revenue = percentage complete × contract value. This is what you've actually earned based on how much work is done.
- Billed to Date = total invoices sent to the client for that job to date.
The difference between those two numbers creates your WIP position:
- Under-Billing (asset) = Earned Revenue exceeds Billed to Date. You've done the work but haven't invoiced for it yet. Under-billings are a current asset — they represent money you've earned and will collect.
- Over-Billing (liability) = Billed to Date exceeds Earned Revenue. You've collected payment for work you haven't yet completed. Over-billings are a current liability — you owe the client that work.
Why This Matters to Your Bank
When a lender reviews a construction company's balance sheet, they look for net under-billings as a current asset and net over-billings as a current liability. A business with $180,000 in net under-billings has $180,000 in near-term receivable revenue that isn't visible in standard accounts receivable. Lenders who understand construction will credit this when sizing a line of credit. Builders without a WIP schedule can't document this asset at all — and leave credit capacity on the table as a result.
Bonding companies use WIP differently. They're assessing whether you have the financial capacity to complete all your active work and take on more. They want to see that you're not over-extended — that your billings are tracking with your actual progress, and that your net under-billing position is reasonable relative to your contract backlog. Without a WIP schedule, you can't answer those questions. With one, you become a different category of client to your surety agent.
Why Builders End Up With Over- and Under-Billing Problems
Most WIP problems aren't the result of deliberate financial engineering. They come from common practices that seem reasonable in isolation but create distorted financial pictures.
Calendar-based draw schedules. Many residential construction contracts have payment milestones tied to calendar events: "25% at framing complete, 25% at rough mechanicals, 20% at drywall." The problem is that framing rarely finishes on the schedule assumed when the contract was written. If you bill the framing draw when the calendar says you should, but framing is only 80% complete, you've created an over-billing of 20% of that draw amount. Multiply that across four or five active jobs and you have a meaningful liability on your balance sheet that your P&L doesn't show.
Front-loading invoices for cash flow. Some builders deliberately bill ahead of completion in the early project phases to build a cash cushion for materials and labor. This is understandable — and sometimes necessary — but it creates an over-billing position that accumulates until the back end of the project. If a project is cancelled or goes into dispute, your over-billing becomes a liability you have to refund.
Forgetting to invoice for completed work. Under-billing usually happens at the end of projects, when builders wrap up punch list work and then delay the final invoice for weeks. That delay means you've done the work but it's not on your P&L and not in your AR aging. You're essentially extending credit to a client for completed work without knowing it.
Percentage-complete estimates that drift from reality. If you estimate you're 60% complete when you're actually at 55%, your earned revenue calculation is wrong by 5% of contract value. On a $600,000 job, that's $30,000 in incorrect WIP position. Most builders are directionally close on their completion estimates, but the error compounds across a portfolio of five or six active jobs.
How to Build a Basic WIP Schedule in QuickBooks and Excel
You don't need specialized WIP software. A monthly WIP schedule can be built in Excel or Google Sheets using data you already have in QuickBooks and JobTread. Here's the process:
Step 1: Pull your active job list from JobTread. List every active contract with the original contract value, any approved change orders (add these to get the revised contract value), and the current estimated percentage complete from your JobTread budget vs. actuals view.
Step 2: Pull billed-to-date from QuickBooks. For each job, pull the total invoices issued to date from QuickBooks. If your QuickBooks is set up with Customer:Job tracking, this is straightforward. If not, use JobTread's invoice summary for each project.
Step 3: Calculate earned revenue per job. Earned Revenue = Revised Contract Value × % Complete. If a $400,000 contract is 65% complete, earned revenue is $260,000.
Step 4: Calculate over/under billing per job. Under-billing = Earned Revenue minus Billed to Date. Over-billing = Billed to Date minus Earned Revenue. A positive number is an under-billing (asset). A negative number is an over-billing (liability).
Step 5: Sum to get your net WIP position. Total under-billings minus total over-billings = net WIP. This number represents the overall earned but uncollected position across all active work.
What Lenders Want to See
A banker reviewing your WIP schedule wants to see that net over-billings stay below 10–15% of total contract backlog. They want your under-billing position to show you're doing real work ahead of billing — it signals a healthy operation. Builders who can produce a WIP schedule that tells a coherent story about their active work typically qualify for 30–50% higher credit facilities than builders who show up without one.
Once you have the schedule built, run it monthly, on the same date each month. The trend matters as much as the snapshot. A WIP schedule that shows your under-billings growing over three consecutive months tells a very different story than one where they're shrinking.
WIP Schedules and Bonding Capacity
Most residential builders who apply for surety bonds for the first time are surprised by how much their financial presentation matters to the bonding company. Surety agents are evaluating whether your company has the financial resources, operational capacity, and financial controls to complete your backlog and take on more work without defaulting.
WIP schedules speak directly to that question. A clean WIP schedule that shows:
- Active contract backlog by job with contract value, earned revenue, and billed to date
- Net under-billing position that's reasonable relative to backlog (typically 5–15%)
- No large over-billings that signal front-loaded invoicing or stalled projects
- Percentage-complete estimates that align with draw requests
...tells a surety agent that you run a financially disciplined operation. Builders who can produce this document consistently qualify for higher single-project limits and higher aggregate bonding limits than builders with equivalent revenue but no WIP documentation.
The builders I work with who produce monthly WIP schedules and bring them to their annual bonding reviews typically see their bonding capacity increase 40–60% over two to three years — not because their revenue grew proportionally, but because they can now document the quality of their active work in a way their surety agent can underwrite.
If you haven't produced a WIP schedule before, start with this month. The first one will take two to three hours as you build the template and reconcile the numbers. Subsequent months take 45–60 minutes once your data sources are organized. That's a small investment for the financial visibility and lending capacity it creates.
Get a Go First Financial Visibility Assessment
If you're not producing a monthly WIP schedule, a job cost variance report, and a 30-day cash forecast, you're running on financial instinct. The Go First strategy call identifies the exact gaps and the sequence to close them.
Book a Strategy Call →Frequently Asked Questions
A WIP (Work in Progress) report is a financial schedule that compares earned revenue — the revenue you've actually earned based on percentage of completion — against billed revenue on every active project. The difference shows either an under-billing (you've done work you haven't yet invoiced for, which is a current asset) or an over-billing (you've billed ahead of actual progress, which is a current liability). Banks, bonding companies, and sophisticated clients use WIP reports to assess a builder's real financial position.
The most common method for residential construction is cost-to-cost: divide the costs incurred to date by the total estimated project cost. If a $400,000 contract has an estimated total cost of $320,000 and you've incurred $176,000 in costs so far, the project is 55% complete (176,000 ÷ 320,000). JobTread's Budget vs. Actuals report provides this data directly if your cost codes are current. Always use current estimated costs, not the original estimate, if scope has changed.
An over-billing occurs when a builder has billed more to a client than has been earned based on actual project progress. For example, if you've billed $200,000 on a job but the work is only 40% complete on a $400,000 contract, earned revenue is $160,000 — meaning you have a $40,000 over-billing. Over-billings appear as a current liability on your balance sheet because they represent work you owe the client. They're common in construction but become a problem when large and undocumented.
Most lenders who specialize in construction lending will ask for a WIP schedule as part of the credit application. Lenders who don't specialize in construction may not ask for one — but builders who present a clean WIP schedule alongside their financial statements typically receive more favorable terms. The WIP schedule documents current asset value in under-billings that doesn't appear in standard accounts receivable, which increases the lendable base most commercial credit facilities are sized against.
Monthly is the standard for active construction companies. Update the WIP schedule on the same date each month, using current cost data from QuickBooks and current completion percentages from JobTread. Quarterly is the minimum for businesses with longer project cycles or lower job volume. The trend across consecutive monthly WIP reports is often more informative than any single month's snapshot — a growing under-billing position over three months signals strong production ahead of billing, while growing over-billings warrant investigation.
