A job schedule—also known as work-in-progress or WIP schedule—is a subsidiary ledger that tracks actual costs and billings per project. Ideally, your job schedule should be updated and reconciled with the general ledger at least once a month. But in the fast-paced contracting world, it can be tempting to fall behind on these tasks.
Unfortunately, not maintaining your job schedule can have consequences that stretch beyond a single project. Here are three reasons why maintaining your job schedule on a monthly basis is simply good business.
1. Errors and instances of over/under billing on your job schedule can affect your gross profit.
Reconciling your job schedules with your general ledger each month is a smart way to identify errors on your job schedule or general ledger. Common mistakes include posting direct job costs to an indirect or overhead account, posting costs to the wrong job, or forgetting to include costs associated with small miscellaneous jobs, such as callback, carryover, and warranty work in the cost of sales. It also allows you to review over/under billings and their causes. For instance, is an under billing an indication the job isn’t going well, or is it that your billings aren’t being sent out in a timely manner? Regularly maintaining your job schedule can help you get to the bottom of it and make billing adjustments if needed. Without the proper adjustments, your gross profit and bottom line are likely to be inaccurate.
2. Project managers rely on job schedules to deliver on-time, on-budget work.
Your job schedule is a critical project management tool. An updated, accurate job schedule allows a project manager to consistently monitor and track a job’s profitability—key to a successful delivery. Job schedules also provide a way to continually compare a job’s actual costs to estimated costs, which is, of course, valuable information to have when bidding out future jobs.
3. Outside users expect to see accurate job schedules.
Job schedules are typically laid out in an Excel spreadsheet and should include columns for year-to-date (YTD) billings and costs and prior-year (PY) billings and costs. If you’re not updating your job schedule and reconciling it with your revenue and costs of sales in your general ledger, it’s nearly impossible to verify that you’ve accounted for everything. This could lead to inaccurate billings adjustments and misleading information. Whether your outside users are internal executives or external stakeholders or sureties, handing over an inaccurate job schedule won’t put you in the best light.
Job schedule maintenance: A good business practice to start today.
Updating your job schedule and reconciling it with your general ledger each month can help you get an accurate picture of your gross profits and better manage your cash flow. And that’s good business! We understand, however, that worrying about your job schedule can be overwhelming, especially if you’ve already fallen behind. If you’re unsure of how to best maintain your job schedule or would like recommendations for going forward, please know the Twin Cities CPA firm of JAK is here to help.