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.
- Automated release of WIP to final accounts: The WIP revesal
point is evaluated everytime the work task transaction is transferred to
finance. If the WIP reversal point has been met; then the work task
transaction is reposted. When its reposted the following happens; two new
posting lines are created on the exiting work task transaction; . one to
revert the current posting line (WIP postings) and one posting line for the
final account posting. The postings will have the status Valid
or Error and the work task transactions status is updated
to Reposted. In order for the changes to take effect in
finance, the work task transaction must be transferred to finance. When
transferred, the status of the transaction is updated to Transferred.
- Manual WIP reversal: WIP can be manually reversed to final accounts even before the WIP Reversal point is met. This can be done
by using the function Relase WIP to Final Accounts. This
funciotn can be used both from task level or transaction wise.
Methods of WIP Reversal
- 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.
WIP Reversal Conditions
- Task Finished: WIP will be reposted or transferred to final accounts when the task get finished.And the WIP Reversal date will be the Actual Finish date of the task which will set once the work task
status is work done.
- Task Completed: WIP will be reposted or transferred to final accounts when the task get finished.And the WIP Reversal date will be the
date at which the work task state is set to finished, which is the task
finish event date.
- Transferred to CO: WIP will be reposted or transferred to final accounts when the transactions are transferred to customer order.
- CO Line Invoiced: WIP will be reposted or transferred to final accounts when the customer order line is invoiced.
WIP Reversal Dates
- Event Date: WIP will be reposted or transferred to final accounts on the specific event date. The event implies the respective event given under the WIP Reversal condition.
- Transaction Date: WIP will be reposted or transferred to final accounts considering the transaction date.