Surety Bond Quarterly - Winter 2014 - (Page 32)

feature BY BRIAN POLLACK The Importance of Cracking the "WiP" Monthly AlThOUgh ThE CONSTRUCTION industry generally seems to be picking up, gross profit margins continue to be tight. These continued tight margins make it ever so important to have timely, accurate, monthly financial statements so the proper business decisions can be made. Nothing drives the financial statements for a contractor more than the calculation of the under and overbillings on a work-in-progress (WIP) report. This report allows the financials to accurately recognize earned revenue on contracts under the percentage of completion method. Without this data on a monthly basis, the financial statements are not worth the paper they are printed on. While cash might still be king in today's business world, data is its first-born heir. It is this data that feeds the decision-making processes of a successful business. What are the benefits of a monthly WIP report? * This report will provide the ability for a quick comparison of actual results to the budgeted estimates. 32 * Tracking potential contract profit fade on a monthly basis will lead to the ability to make quicker decisions to correct the reasons for the fade. * It will assist in recognizing "earned revenue" versus "invoiced revenue" each month on the profit-andloss statement. * The report will assist in cashflow management job by job as well as for the overall company by showing the levels of under and overbillings at the end of each month. * The WIP report will assist in the tracking and processing of change orders on a quicker basis. * The WIP report also contains the gross profit backlog which indicates how much future overhead is covered by work on hand. * Bonding - This report is a necessity when it comes to obtaining, maintaining and potentially increasing a company's bonding capacity. Surety companies rely heavily on this report when evaluating the bondability of a company. surety BoNd Quarterly | WINTER 2014 The preparation of a monthly WIP report benefits all levels of a company, from the superintendents and  project manager to the accounting department and owners. These timely reports will assist in financial operations running more smoothly and maintaining expected profit margins. In the end, it will make it much easier to forecast future needs and opportunities for the company. If you have any questions or need assistance in getting to the level of  preparing a WIP on a monthly basis, you should contact a knowledgeable and construction-oriented CPA. ● Brian Pollack, CPA, a partner of the CPA firm of Lanigan, Ryan, Malcolm & Doyle, P.C., provides services to owners of privately owned companies that typically work in the construction, government contracting, or real estate industry. He can be contacted at bpollack@lrmd-cpa.com or 301-258-8900.

Table of Contents for the Digital Edition of Surety Bond Quarterly - Winter 2014

NASBP Upcoming Meetings
2014-2015 NASBP Executive Committee
From the CEO: Education is everywhere and in everything we do
Practical Insights: What You Need to Know-Lease Accounting, A new standard is coming
Surety Up North
Training the Next Generation of Surety Talent
EJCDC’s New P3 Document
The Top 10 Things Public Owners Should Know About Surety Bonds
What's a Construction Company's Most Valuable Asset?
NASBP Virtual Seminars
School’s Back!
New NASBP Resource: Information map of advocacy issues
Meetings in Photos
The Importance of Cracking the “WIP” Monthly
U.S. Customs and Border Protection to Deploy eBond
NASBP Outreach Continues Throughout the Year
Index to Advertisers

Surety Bond Quarterly - Winter 2014

http://www.nxtbook.com/naylor/SBPQ/SBPQ0118
http://www.nxtbook.com/naylor/SBPQ/SBPQ0417
http://www.nxtbook.com/naylor/SBPQ/SBPQ0317
http://www.nxtbook.com/naylor/SBPQ/SBPQ0217
http://www.nxtbook.com/naylor/SBPQ/SBPQ0117
http://www.nxtbook.com/naylor/SBPQ/SBPQ0416
http://www.nxtbook.com/naylor/SBPQ/SBPQ0316
http://www.nxtbook.com/naylor/SBPQ/SBPQ0216
http://www.nxtbook.com/naylor/SBPQ/SBPQ0116
http://www.nxtbook.com/naylor/SBPQ/SBPQ0415
http://www.nxtbook.com/naylor/SBPQ/SBPQ0315
http://www.nxtbook.com/naylor/SBPQ/SBPQ0215
http://www.nxtbook.com/naylor/SBPQ/SBPQ0115
http://www.nxtbook.com/naylor/SBPQ/SBPQ0414
http://www.nxtbook.com/naylor/SBPQ/SBPQ0314
http://www.nxtbook.com/naylor/SBPQ/SBPQ0214
http://www.nxtbookMEDIA.com