The purpose of Accrued WIP is to allow you to allocate WIP after the Bill has been raised, instead of taking a profit and reducing later. It is used when the Bill has been raised before the job has been completed (time entered).
How to handle Accrued WIP (Negative WIP) is one of the most common questions in the Support department. This guide will show you what to do when you have Accrued WIP.
Generating the Accrued WIP
The Client has an Outstanding WIP amount of €500 but the Bill raised is for €1000
€500 is allocated against the Outstanding WIP and €500 is left in Accrued WIP.
Once the Bill has been Saved & Closed the Accrued WIP figure will then be displayed on the clients WIP ledger as a negative figure
It will also show on the Client Aged WIP Report as a negative amount
How to Handle Accrued WIP
You have two choices when it comes to handling Accrued WIP;
• Allocate it against Outstanding WIP
• Take it as a Profit or Loss
Allocating Accrued WIP
When Allocating WIP you have three options.;
1. Allocate through a new Bill
2. Allocate through the WIP Allocation (By Client/Job) routine.
3. WIP Allocation (By Bill)
New Bill: When you create a new Bill, the Outstanding WIP will show as negative and the WIP transaction tab will show an entry for Accrued WIP.
In this example we have a Bill for €50 and € 170 outstanding WIP but Accrued WIP of €300 giving us a -€140 To correctly allocate this Bill and reduce the Accrued WIP you need to;
Allocate the Bill Amount as normal.
In the WIP Allocation column you will need to manually allocate the Outstanding WIP transactions against the Accrued WIP. In this example we have 300 Accrued WIP but only 110 in Outstanding WIP. When the allocations are complete we will be left with €190 Accrued WIP.
You can also raise a zero bill and do the manual allocations to clear off Accrued WIP.
WIP Allocation (By Client/Job) routine: This routine is located in the WIP ledger module found in the navigation menu on the left hand side of DRIVE. When you select the WIP Allocation (By Client/Job) routine the “WIP Allocation” window will be displayed.
You will need to select your Client and your Job. The Amount to be allocated will be populated once you have made these selections.
To Auto allocate, simple select the Auto button. This will allocate the Accrued WIP against the Outstanding WIP starting with the earliest dated entry.
To manually allocate, type the correct figures into the Allocation boxes. Select the Save & Close button to save the changes made.
WIP Allocation (By Bill) routine: This routine is located in the WIP ledger module found in the navigation menu on the left hand side of DRIVE. When you select the WIP Allocation (By Bill) routine the “WIP Allocation” window will be displayed
This will display a list of outstanding Bills. Select the Bill you want from the outstanding list. The Bill will open. Follow the steps that were previously outlined in “New Bill” above.
Taking a Profit or Loss
Identifying the Correct Bill: To take a Profit or Loss you must first locate the Bill that has the Accrued WIP. You can do this by viewing the WIP ledger for the Client in question. Beside the Accrued WIP entry you can see a Bill No (see Figure 9). This is the Bill you will need to edit to clear the Accrued WIP.
Editing the Bill: Once you have located the Bill with the Accrued WIP, you will need to edit the following;
• The Profit or Loss Column
• The Recovery Tab
The following sequence should make editing the Bill easier.
In the Job Split take the Accrued WIP amount as Profit. Simply by typing in the Profit column box the Accrued WIP column will reduce (see Figure 10).
You will then need to correct the Recovery tab so the information reflects the last three columns of the Job Split.
1. You need to zero the Accrued WIP column.
2. Change the WIP code from Default Billing in Advance to Default Profit taken (WIP codes will differ in every practice)
3. Enter the amount into the Profit column.