About WIP (Work in Progress)

Introduction

Work in Progress is a method used to handle incurred cost for work that will later be invoiced. It can also be used for an asset where the value is expected to increase after the work is finished. During the work money spent towards completing a product or a service can be seen as a company asset. However, because of the reason that the work has not yet been completed, the monetary values incurred from WIP should be kept in separate accounts during the in-progress period.

For an example, if a service that a Service Management organization delivers is in progress and not completed, the costs incurred cannot be invoiced and posted to final accounts. Hence, the costs are maintained in a temporary account during the work in progress period. Once the work is completed and invoiced, WIP can be released and cost moved from the WIP account to a final account, for example: cost of sold services.

In the Work Task Managment solution, WIP is configured in the Wok Task Cost Codes Rules. In the rules its a WIP reversal point also defined, which is the point in time when the cost is moved from the WIP account to its final account.

 WIP Reversal Point

Once the work is completed, and the WIP reversal point is met, the respective WIP is released to the final accounts.

Methods of WIP Reversal

  1. Using WIP reversal conditions and dates: WIP maintained on temporary accounts can be reversed to final accounts by defining WIP Reversal Conditions and WIP Reversal Dates on Cost Code Rules.


  2. WIP Reversal Conditions


    WIP Reversal Dates