WIP (Work in Progress)

WIP in professional services represents hours or days worked by consultants that have generated accrued revenue but have not yet flowed into an issued invoice. It is typical in T&M contracts with monthly trailing invoicing or in Fixed Price contracts with milestones not yet reached.

Managing WIP well is critical: high unbilled WIP signals process issues (late timesheets, slow client approvals, administrative blocks) and impacts cash flow. A PSA tracks WIP per project, alerts on abnormal balances and supports the periodic billing review, cutting DSO (Days Sales Outstanding) by 10-20 days.

Almost all of the delay behind unbilled WIP is internal, which is why it is the cheapest working-capital problem a firm can fix. The five steps between a worked hour and a dispatched invoice — entry, approval, terms validation, invoice preparation and dispatch — each accumulate their own lag, and none of them requires a conversation with the client to shorten.

Approval deserves particular design attention because it is where the queue usually forms. A manager asked to review four hundred lines will not do it, and will approve in bulk on the last day. Reviewing only the anomalous — hours outside the assignment, bookings to closed projects, lapsed rates, overrun against plan — turns half an hour into three minutes and tightens control rather than loosening it.