Now that we have analysed your billable WIP balance, let’s take a look at how we can reduce it.
Using the same billable WIP filter you prepared earlier in XPM go to Business > WIP, select the ‘List’ tab. This will hide your subtotal for the billable WIP balance in your practice but provide more detail into the jobs that make up this balance.
If you have multiple partners or job managers in your practice, add an additional criteria to this report for ‘job manager =’ or ‘job partner =’ and create a WIP filter by job manager or partner. This will allow you to see which job managers or partners are carrying the most WIP and prioritise your invoice preparation accordingly.
Top Tip: Ensure first that all jobs are allocated a job manager and partner. This is covered in Chapter 7: Setting Up Engagements under the general guidelines, and again in Chapter 8 - Project management under the setting up jobs section.
XPM does not subtotal this report for us so we are unable to quickly identify the job managers or partners most requiring invoices or write-offs to be applied. The only way to see who in your practice needs to create invoices is to use the WIP Comparison report in Link Reporting grouped by job manager or partner, which will be covered in more detail at the end of this section.
Inside your XPM, you should now have a list of just your billable jobs (excluding your fixed-price agreements). You can sort this high to low by clicking on any of the column headers. Sorting by WIP is a good option here. This will allow you to prioritise your invoicing to the jobs with the highest WIP balance.
Despite filtering out fixed-price agreements you may still have some negative values in this list. These will be from billable fees jobs that have a quoted value for which we have raised a deposit invoice. These jobs are typically one-off such as cash-flow forecasts. As we add time to these jobs the negative WIP balance created by our deposit invoice will be reduced. Eventually we will have a positive WIP balance again on these jobs that we should consider sending a final invoice for.
Now that we can see our billable WIP for our jobs in our practice, and prioritised these on those jobs most needing invoices. How do we go about creating these?
It is important to firstly note that in XPM the values shown for time, costs and deposits in this report do not represent the total values of time, disbursements or invoices to date on these jobs; only the un-invoiced portion of these. To see the total billable and invoiced values to date we will need to drill-into each of the jobs in this list.
Holding down the ‘Ctrl’ key if you’re using a PC or ‘command’ if you’re using a Mac, open up each job in a new tab by clicking on the job number. Review the financial status of these jobs by going to the financial tab and viewing the job financial summary (on the lower left).
This will provide the job manager and partner with some of the remaining information they will need to determine what jobs can be invoiced and what value those invoices should be
Your job managers and partners may still be missing some key information required:
- Job budgeted value or expected fee
- Task progress and completion
- Any write-on’s or write-offs incurred to date
It is also important to note that unlike the billable WIP report you have prepared, the job financial summary cannot be run retrospectively. It always shows the current financial state of a job as at the date and time you run it. This means the time, task progress, billable, and invoiced values shown in this report may not match the values shown in the WIP report.
The only place your job managers and partners can see all the information they need to create invoices and apply write-offs in one place is in Link Reporting. Link Reporting has been designed to plug all the reporting holes in XPM, and to deliver insights the accounting industry has never had access to in the past. It uses a clever set of calculations on your XPM data to generate reports that are much easier to interpret, allowing you to see the areas of your practice that require your attention. Measuring and reducing your billable WIP balance in Link Reporting is easy, and provides you all the information your partners need to make informed invoicing and write-off decisions.
The WIP Performance report in Link Reporting is the only report that allows you to identify the billable WIP balance in your practice broken out into each of the elements of WIP. You can drill all the way down to a time sheet level to see how and why your WIP balance is increasing. The WIP Performance report also provides you a WIP multiple which you can compare over time to ensure your billable WIP balance remains low.
The WIP Comparison report in Link Reporting allows you to group, subtotal and drill into the individual WIP Balances on each of your jobs. This lets you prioritise and complete invoicing for job managers and partners faster, and apply write-ons/offs more regularly. This reduces your WIP balance, identifies process bottlenecks, and prevents hold-ups on invoices where there are multiple entities involved.
Now that we’ve covered measuring, monitoring and reducing the billable WIP balance in your practice. Let’s look at it’s brother: Negative WIP.