WIP (also known as Work in Progress) represents time or costs that have not yet been billed through your billing system. There are many reasons to make sure you are billing routinely, and we’ve included some of the top reasons below:
1) More clarity about your KPIs: Without billing, you may have no idea what your actual WIP and A/R is – and therefore not realizing your income correctly. Both your A/R (or general retainer) may now be over or understated;
2) Client communications – if clients are not kept up to speed and the first bill they get is when they owe more money, that can be an unhappy surprise. Billing on a routine basis allows for more frequent communication. It’s human nature (and optimistic) to assume that things will take less time and cost less not more. By billing more frequently, the client is up to date on the balance that remains of the retainer and will not be shocked when asked for additional funds
3) Less effort during billing process – constantly ignoring your client work in progress until they may have several months worth of billing is far more time consuming to edit.
4) More profitable: When time is “stale” there is often an inclination to reduce or credit the billing, anticipating client objections or dissatisfaction with the delay. By billing more routinely, there is less likelihood that these types of credits will be needed.
5) Cash flow: Often when time is “fresh”, clients are more willing to pay an invoice, especially if work completed produced a favorable outcome. Time from more than 45 days in the past will prompt client questions and oftentimes concern.