Work in progress integration

You can carry forward the costs and revenues you enter in the actual costing per project to the financial administration. We call this WIP Integration. For this purpose, you link ledger accounts to calculation bases. The journal entries for the work in progress are entered on these ledger accounts. Because you assign the ledger accounts to the calculation bases, you can base the journal entries, for example, on the project (group), the work type (group) or the article (group), as well as on custom dimensions.  

Contents

Description

After journalising the WIP integration (integration type 4), a journal entry is created based on the following project entries:

  • Cost entries in the actual costing.
  • Generating a project invoice, an instalment invoice, a subscription invoice (for a project) and a sales invoice (for a project).
  • Charging an invoice from Financial

When these entries are journalised, the amount of the work in progress is updated on the balance sheet. You can enter all journal entries in Profit Financial, using up to five allocations. In Profit Projects, you specify which project dimension you link to the various allocation axes in Profit Financial.

The amount of the work in progress on the balance sheet can be considered to be the 'working stock'. Costs have been incurred for this and you expect to earn money from this at a later stage. If you were to enter these amounts directly on the profit and loss account, it could lead to a distorted image if, for example, a long-term project is only invoiced at the end. It would then appear as if many costs were incurred without any revenues, which would affect the result negatively. Vice versa, invoicing advances can make it seem as if turnover has already been realised, but that no costs have been incurred.

When you report the completion of the work in progress (if appropriate per project), the total of costs and revenues is taken off the balance sheet and entered on the profit and loss account. Reporting this completion is also called 'profit taking'. When you report the completion of WIP, a journal entry is created using integration type 5 (Complete WIP).

Overview of WIP integration in Profit:

The part framed in red is only possible if you have selected WIP Integration in the settings.

Explanation of the diagram:

  • Profit enters project costs and revenues as WIP and as entry types 9 (costs) and 10 (revenues).
  • Every entry of costs and revenues for a project is registered as WIP entered and as entry (type 9 (costs) and 10 (revenue)).
  • By journalising these entries using integration type 4, the costs and revenues entered are transferred to the balance sheet.
  • When you report the completion of the WIP, the total of the WIP entered is transferred to the completed WIP, for which entries are also created (types 11 (costs) and 12 (revenue)).
  • By journalising these entries using integration type 5, the costs and revenues of the completed WIP can be taken off the balance sheet and entered on the profit & loss account.

Preparation

Procedure

Also see

Directly to

  1. Work in progress
  2. Configure work in progress
  3. Period totals for work in progress
  4. Work in progress integration