Learn: Construction Finance & WIP Reporting
Expert guides and answers on WIP reporting, construction accounting, and financial management for contractors.
Guides
- The Complete Guide to WIP Reporting for Contractors — A comprehensive guide to mastering WIP reporting, percentage-of-completion accounting, and construction financial management. Learn how to track project profitability, avoid margin fade, and optimize cash flow.
- The Construction CFO Playbook: From Bookkeeper to Strategic Leader — A comprehensive guide to building CFO-level financial leadership in your construction company. Learn the systems, metrics, and processes that transform reactive bookkeeping into proactive strategic management.
- How to Value a Construction Company — A practical guide to construction company valuation. Learn the multiples, methods, and key factors that drive contractor valuations for succession planning, acquisitions, or sale.
- The Complete Guide to J-Curve Investment Analysis for Construction — Master J-Curve investment analysis for construction companies. Learn to model new hires, equipment purchases, and market expansion with confidence.
- Construction Labor Capacity Planning: A Practical Guide — Learn how to assess labor capacity, plan for workforce needs, balance project timelines with available resources, and avoid the costly mistakes of over-committing or under-utilizing your team.
- Overbilling & Underbilling Explained: A Contractor's Complete Guide — A comprehensive guide to understanding, measuring, and managing overbilling and underbilling in construction. Learn how billing positions affect cash flow, bonding capacity, and financial health.
- WIP Red Flags: Warning Signs Every Contractor Must Watch — Learn to spot the warning signs in your WIP report that predict margin fade, cash crises, and project failures before they happen. A field-tested guide from two decades of contractor financial reviews.
Quick Answers
- What Is Backlog and Why Does It Matter? — Backlog is the total value of work under contract but not yet completed. It's a key indicator of future revenue and business health.
- How Does WIP Reporting Affect Bonding Capacity? — Sureties use WIP reports to assess risk and determine bonding capacity. Clean, accurate WIP reporting directly increases the size and number of projects you can bond.
- What's the Difference Between a CFO and an Accountant? — An accountant records and reports financial history. A CFO uses that history to drive forward-looking strategy, manage risk, and guide business decisions.
- How Should Contractors Track Change Orders? — Proper change order tracking requires documenting pending, approved, and rejected changes separately, and updating WIP calculations only when approved.
- Why Is Cash Flow So Critical in Construction? — Construction companies operate on thin margins with long payment cycles. Poor cash flow management kills more contractors than lack of work.
- What's the Difference Between a Controller and a CFO? — A controller manages historical financial accuracy. A CFO focuses on forward-looking financial strategy. Learn why this distinction matters for contractors.
- Can a Controller Do WIP Reporting? — A controller can produce a WIP report, but interpreting it strategically — spotting margin fade, optimizing billing, forecasting cash — requires CFO-level thinking.
- Buy vs. Rent Equipment: How to Decide for Construction — Use J-Curve analysis to compare buying versus renting construction equipment. Learn which factors matter and how to model both scenarios side-by-side.
- What Is a Fractional CFO for Construction? — A fractional CFO provides part-time, outsourced strategic financial leadership for contractors who need CFO-level insight without the cost of a full-time executive.
- How Much Does an Outsourced CFO Cost? — Outsourced CFO services for contractors typically cost $3,000-$8,000 per month — a fraction of a full-time CFO's $250K-$400K+ annual cost.
- How to Calculate Investment Breakeven in Construction — Learn how to calculate when a construction investment—new hire, equipment, or expansion—will break even using J-Curve analysis and cumulative cash flow modeling.
- How Do You Calculate Percent Complete on a Construction Project? — Percent complete is calculated by dividing costs incurred to date by estimated total costs. It's the foundation of WIP reporting and percentage-of-completion accounting.
- What Is Job Costing in Construction? — Job costing tracks all costs for a specific construction project — labor, materials, equipment, and subs. It's the foundation of profitability analysis.
- What's the Difference Between Overbilling and Underbilling? — Overbilling means you've billed more than you've earned. Underbilling means you've earned more than you've billed. Both affect cash flow and balance sheet differently.
- What Are Signs My Company Needs a CFO? — If you're profitable but cash-strapped, making gut-feel decisions on major purchases, or limited by bonding capacity, your company likely needs CFO-level financial leadership.
- What Does a Construction CFO Actually Do? — A construction CFO provides strategic financial leadership — cash forecasting, WIP analysis, bonding optimization, and risk management. They turn financial data into actionable strategy.
- What Is a Ramp Period for Construction Investments? — The ramp period is how long it takes a new hire, equipment, or expansion to reach full productivity. Learn why it's critical for accurate investment modeling.
- What Is J-Curve Analysis in Construction? — J-Curve analysis visualizes how investments like new hires, equipment, or expansion drain cash before generating returns. Learn the three phases and how construction companies use it.
- What Is Margin Fade in Construction? — Margin fade is the gradual erosion of profit margin on a construction project as actual costs exceed estimates. Early detection through WIP reporting is critical.
- What Is Underbilling in Construction? — Underbilling means you've earned more revenue than you've billed. It ties up working capital, hurts cash flow, and signals collection or billing process problems.
- What Is a WIP Report in Construction? — A WIP report tracks all active construction projects, comparing costs incurred, billings, earned revenue, and projected profitability. It's the foundation of construction financial management.
- When Does a Contractor Need a CFO? — Most contractors need CFO-level thinking around $10M in revenue, when seeking bonding capacity growth, or during major transitions like acquisitions or succession.
- What Are WIP Adjustments and Why Do They Matter? — WIP adjustments are accounting entries that align recognized revenue with percentage-of-completion calculations. They're critical for accurate financial statements.
- How Often Should You Run a WIP Report? — Most contractors should run WIP reports monthly at minimum. Weekly reporting is ideal for active projects or those with tight margins.