A WIP your surety accepts, every month
Your surety doesn't want a pretty WIP. It wants one that ties to the balance sheet and the income statement. Here's how to find why yours doesn't, and how to produce it every month from live job cost.
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Why the WIP doesn't tie
You build the WIP, you pull the financials, and the numbers disagree. Revenue on the WIP is off from the income statement, and the over and under billing total doesn't match the balance sheet. One person spends two days finding out why, and the answer is different every month.
Three causes explain most of it. The first is cost cutoff. Bills for June work get entered in July, so job cost on the WIP is short while the ledger catches up, or the WIP was pulled before the last bills were posted. The second is billings. The WIP says you billed one number, but the income statement says another because a pay app was voided, a retainage line was posted to the wrong account, or an invoice went to the wrong job.
The third is percent complete from a gut call. A PM tells you a job is mostly done, and no one checks that against cost to date and the estimate. When percent complete comes from a guess, revenue earned moves with the guess, and the surety sees it. A WIP that ties comes from cost, budget and billing that all read from one place.
What sureties and banks look at
A surety or bank reader starts with the totals. Total contract value less earned revenue should equal backlog. Over and under billing should match what's on the balance sheet. Gross profit by job should add up to the gross profit on the income statement. If those three tie, they read the job lines. If they don't, they start asking questions about everything else.
They also look at fade. A job that was estimated at one margin and is forecast at a lower one every month tells them your estimating or your field control has a problem. A WIP that shows fade early, with a PM's cost to complete behind it, reads as a contractor who knows where the jobs are going. One that shows a surprise loss in the last month reads the other way.
- Contract value, change orders and revised contract by job
- Cost to date and estimated cost to complete, with who approved it
- Percent complete computed from cost, not typed in
- Billed to date, over billing and under billing by job
- Totals that tie to the balance sheet and income statement
How to fix it in QuickBooks today
Start with cutoff. Pick a date, close the prior month in QuickBooks, and pull job cost only after every bill dated in that month is entered. Pull an open bills report and a purchase order report, and look for received but not billed items. Add an accrual for anything the vendor hasn't invoiced yet, and put it on the job.
Next, tie billings. Pull the invoice register by job for the month and compare it to the revenue accounts on the income statement. Fix voided or misposted pay apps before you build the WIP. Then compute percent complete as cost to date divided by total estimated cost, and make sure total estimated cost is cost to date plus a cost to complete the PM signed off on.
Do this in a spreadsheet and it works for a while. At $10M it takes a day. At $30M, with forty jobs, it takes the controller most of a week and the file has a dozen tabs that only one person understands. That's the point where you want the WIP to come from the same job cost the books use, not from a copy.
A monthly WIP from live job cost
CFOS for QuickBooks works on top of QuickBooks Online. It reads jobs, cost codes, vendors, bills and invoices from QuickBooks, and job cost by cost code against the budget is updated every hour. The WIP schedule is built from that job cost, so cost to date on the WIP is the same number you see on the job cost report.
At month end each PM enters a cost to complete for their jobs, and the controller approves it. Percent complete is computed from cost to date and that approved forecast. Over and under billing is calculated from the billings in QuickBooks, so a voided pay app or a bill posted late shows on the WIP as soon as it's fixed in the books.
The master WIP rolls every job into one schedule, with the totals your surety and bank read first. QuickBooks keeps the books. CFOS doesn't replace your accounting, and your controller still decides what gets accrued and what gets posted.
| Revenue | Overhead | Gross margin | Net profit, before taxes |
|---|---|---|---|
| $10M to $25M | 13.1% average 12.1% CFOS target | 24.6% average 27.1% CFOS target | 11.5% average 15% CFOS target |
| $25M to $50M | 12.1% average | 25.7% average | 13.7% average |
Gross margin and overhead come from figures CFMA, Jones Maresca and other sources publish by trade and size. Net profit is computed, not surveyed: net profit = gross margin minus overhead. Nothing comes out for taxes, interest or other income and expense, so it is a before tax figure, on the same basis as CFMA's net income before taxes.
CFMA's 2025 medians are 7.1 percent before interest and taxes and 6.7 percent net income before taxes. Gross margin minus overhead leaves out interest and other income and expense, so a figure here can come in a little above or below a reported net income on the same business.
Above the $10M to $25M band the gross margin and overhead rows are a modeled extension of the same curves. They have not been reconciled against the licensed CFMA Benchmarker, so read those bands as a model and not as a survey result.
What a tied WIP should tell you
The table above shows published all-trade averages for the $10M to $25M and $25M to $50M bands, with net profit before taxes. Once the WIP ties, gross margin by job is a number you can trust, and you can compare it to these averages and to the CFOS target for your trade and size. If your jobs fade below the average, the WIP shows which ones, and the PM's cost to complete shows when it started.
Read the totals first and the jobs second. A WIP that ties makes the monthly conversation with your controller about margin. It stops being a talk about why two reports disagree.
At $20M with thirty open jobs, a WIP that takes a week to build is slow. It means the surety, the bank and the owner are reading old numbers. Fix the build and all three get current ones.
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We email you when CFOS for QuickBooks opens, plus a few updates before then. Your address stays with Run On CFOS. One click unsubscribes.
30 days free, a 90-day money-back guarantee, and cancel anytime. It opens January 2027. We email you the day it opens.
What people ask
Why doesn't my WIP tie to the balance sheet?
The usual causes are cost cutoff, billings that differ from the income statement, and over and under billing computed from a different source than the ledger. Check cutoff first, then the invoice register by job. If both are clean, look at retainage and stored materials, which often post to the wrong account.
What does a surety check on a WIP at $20M?
They check that totals tie to the financials, that over and under billing matches the balance sheet, and that margin by job doesn't fade without explanation. They also read who estimated the cost to complete. A WIP with approved PM forecasts behind it earns more trust than one with typed percentages.
Who should approve cost to complete, the PM or the controller?
The PM enters it because the PM knows the job, and the controller approves it because the controller answers to the surety. In CFOS the PM's number goes to the controller, who approves it before it's used in the WIP. Nobody in the office should type a percent complete.
Can an owner read the master WIP without learning accounting?
Yes. The master WIP lists each job with contract value, earned revenue, billed to date and over or under billing. An owner can read the totals and the three or four jobs with the biggest swings, and ask Claude or ChatGPT about any job, as long as the owner's sign in lets them see it.
Do we need to leave QuickBooks to get a WIP that ties?
No. The WIP ties when job cost, budget and billing come from one place and the PM's forecast is approved. CFOS reads those from QuickBooks Online, so you keep your books and your history. Most contractors need a better routine on top of QuickBooks, not a new accounting system.
- Job costing and WIP for contractors doing $10M to $50M
- For the controller who owns the WIP
- A WIP schedule that builds itself from job cost
- Keep your profit
- One price. Every module. Priced by your revenue.
- Over and under billing on every job, every month
- Use all of it, or just the part you need
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