Getting started with work in progress (WIP)

You can use a work in progress (WIP) control account in the Balance Sheet to gather project costs for the duration of the project. The project costs can then be posted in the same accounting period as the project revenue. This ensures the true profitability of your projects is reflected in your financial reports.

How do you set this up?

Choose to use WIP

Open: Project Accounting > Utilities > System Setup > Project Accounting Settings | Postings.

1. Click Settings. The WIP Settings window appears.
2. Select Use Work In Progress (WIP).

This confirms to Sage 200 that you want to gather your project costs into the WIP account in the Balance Sheet for the duration of the project.

Changing the setting

You can change the setting provided that there are no WIP costs waiting to be finalised.

Determine the default WIP nominal account to be used

You must determine the default WIP nominal account to be used for projects, project item types, project items and items within projects at a lower level in the project structure.

Note: The first time you create a new project that uses WIP, or convert an existing project to use WIP, a nominal account which will hold work in progress costs during the project duration cascades through the project structure, ensuring that your projects, item types and items all have a nominal code for collecting the WIP costs.

You can choose how you want to set the default and cascade it through the different levels within the project structure. The cascade options available for selection are determined by whether you have selected Use Specified or not in WIP Settings and whether you are changing the settings after they have been set up.

• To use one nominal account with cost centre and department for all item types and items in the project structure

  Open: Project Accounting > Utilities > System Setup > Project Accounting Settings | Postings.

  1. Click Settings.
  2. Select Use Work In Progress (WIP).
  3. Select Use Specified.
  4. Select a balance sheet posting account for the nominal account.
  5. Click OK.
• To retain the ability to change the WIP nominal account at lower levels in the project structure

  Open: Project Accounting > Utilities > System Setup > Project Accounting Settings | Postings.

  1. Click Settings.
  2. Select Use Work In Progress (WIP).
  3. Leave Use Specified clear.
  4. Select a balance sheet posting account for the nominal account.
  5. You must enter WIP on all items in the project structure. You can choose whether to cascade this nominal account to project item types. If you select project item types, you can choose to cascade the nominal account to project items, and if you select project items you can choose to cascade the nominal account to project items within projects.
  6. Click OK.

Enable WIP on projects

Note: This is for existing projects that were set up and in operation before WIP was enabled in your system.

Open: Project Accounting > Utilities > Enable WIP on Projects.

You can enable WIP for projects created before WIP was enabled in a staggered way and at a pace that you choose. You can enable WIP for individual projects or a number of projects at once.

If your project has sub-projects and you want the sub-projects to use different WIP nominal accounts from the top level project in the project structure, you can set the sub-projects WIP nominal accounts first, before enabling WIP for the main project. Alternatively, you can change the sub-projects WIP nominal accounts after enabling WIP for the main project.

How do the postings work?

If project accounting is in use, project analysis is entered on all relevant transactions - nominal payments and receipts, supplier invoices and credit notes, purchase and sales order items and return items. project issues, returns, allocations and transactions, project cost and revenue adjustment transactions, timesheets and expense claims, also despatching stock and amending goods returned or received. In Sales Order Processing, when WIP postings are made depends on the Update stock quantities when setting on the SOP Settings Order Processing tab. Those postings will be made either on despatch or when the invoice is posted.

• If WIP is not in use, cost and uplift are posted to the default nominal Expense and Uplift codes.
• If WIP is in use, cost and uplift are posted to the WIP account. These are moved to the Expense and Uplift codes when the transactions incurring the costs are finalised.

How do you finalise cost transactions?

Finalising costs means moving the cost value from the WIP nominal code to the final expense or uplift nominal code.

Note: You can select any cost transactions to finalise except for cost transactions that are linked to a sales order or return as these are finalised when the SOP invoice is posted.

You can finalise cost transactions by:

• Selecting to finalise costs for bill lines within Project Accounting > Billing and then posting the billing invoices and credit notes.

  • The full cost value on the transaction is finalised even if the transaction is only partially invoiced.
  • WIP transactions postings move the direct cost value from the WIP code to the transaction Expense code and the uplift cost from the WIP code to the expense account. These use the same URN as the original WIP postings so that there is an audit trail from the project entry to the postings that account for the finalised cost.
  • WIP value is set to 0 (zero).
  • The Finalised date is set to the invoice date.
• Selecting Project Maintenance > Manage Finalising Transactions.

  • The WIP code direct cost value is moved to the transaction Expense code.
  • The WIP code uplift cost value is moved to the transaction Expense code.

  Note: The transactions have the same URN as the original direct cost postings so that you can trace the postings from the project entry through to the finalised cost postings.

  • The WIP value is set to 0 (zero).
  • The Finalised date is set to the date selected for finalisation.

Note: Whichever method you choose for finalising cost transactions, as costs can be partially billed (but only fully finalised), an amount may be billed on a transaction after the cost has been finalised.

How can you see WIP amounts and posting amounts?

If you are using WIP, use the following enquiries and reports:

• Profitability Analysis and Profitability Breakdown enquiries.

WIP cost is included by default although you can exclude it if you want to.

• Cost Transactions enquiry.

You can view the detail of WIP cost and nominal details on the transaction details.

• WIP Transaction enquiry workspace.

This provides information about transactions that have a WIP value or have had the WIP value finalised.

• Billing Analysis and Billing Summary enquiries.

You can see finalised cost for your projects.

• Cost Analysis.

This includes a column, WIP costs, which holds the total WIP value for all transactions included in the row.

• Profitability Breakdown.

WIP is included by default in the project breakdown, but you can exclude it if you want to.

• Cost Transactions.

You can report on transactions that have WIP values and these are included in the WIP costs column. Or you can report only on transactions that do not have WIP values.