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/Task Completed: WIP is reposted or transferred to final accounts when the task status is set to Finished. The difference between the two lies in the dates used for the WIP reversal:
  • Task Finished: The WIP reversal date corresponds to the Work Done date, which is the Finish Date of the work task.
  • Task Completed: The WIP reversal date is based on the task finish event date.
• Transferred to CO: WIP is reposted or transferred to final accounts when transactions are transferred to the customer order.
• CO Line Invoiced: WIP is 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.