Simplifying Work in Progress Accounting Adjustment for Builders with Buildern
Accurate financial reporting shouldn’t be a barrier for growing construction firms to thrive.
Construction financial specialists always state that understanding and accurately applying the Work in Progress Accounting Adjustment (WIPAA) is crucial for construction companies aiming to maintain a clear and precise picture of their financial health.
Neglecting these metrics, home builders operate under false financial assumptions, risking unforeseen cash flow challenges that could lead to dire consequences.
Knowing this has become a driving force for us to add WIPAA calculation functionality. Buildern users no longer need extra accounting skills and can rely on our software to handle the WIPAA for them.
What is Work in Progress Accounting Adjustment (WIPAA)?
Let’s not stress you with professional jargon, but the WIPAA is a financial adjustment technique used by construction companies to recognize their revenue and expenses accurately.
The nature of construction projects with long timelines and multiple phases makes it challenging to track and report on the true financial status of a project. As Russ Stephens, the Co-founder of The Association of Professional Builders (APB) states accountants often lack a comprehensive understanding of WIPAA calculations. Moreover, they often mistakenly record it as an asset on a builder’s balance sheet. In reality, WIPAA is a liability that increases proportionally with the company’s revenue.
This misunderstanding can lead to distorted financial statements, posing risks to the operational stability of construction firms. By accurately accounting for WIPAA as a liability, builders can achieve a more realistic view of their financial status, allowing for better strategic decision-making and financial planning.
How Does Buildern Streamline WIPAA Calculations?
WIPAA monitoring should not be left to accountants only. It’s also the home builder’s duty to be aware of their company’s financial health. Leaving this number to assumptions may result in severe cash problems and unwanted consequences.
While using Buildern for your construction project management needs and financial control, the software presents you with a precise WIPAA overview for each of your projects. You don’t have to get involved in numerous and complex calculations, as Buildern handles these at the code level.
Instead, you receive straightforward numbers that can be easily accessible either from your Dashboard or Project List.
WIPAA Overview in Your Dashboard
WIPAA Overview in Your Project List
What’s more, Buildern’s capabilities don’t limit to just WIPAA calculations. The software also provides a comprehensive overview of:
- Gross margin (actual and planned)
- Actual costs
- Completion percentage WIP
- Earned revenue
- Related costs WIPAA
and so much more!
By employing Buildern, you can oversee your entire project lifecycle – from initial takeoff plans and measurements to project proposal and completion – while also maintaining effective financial oversight.
