Project Work in Progress and Cash Committed

Work in progress can refer to unfinished tasks, accumulated delivery cost, or an accounting balance. Define the term before using it in a cash discussion. For a service project, a management worksheet can track the work performed, costs incurred, bills issued, and cash received separately. A positive earned-revenue figure does not mean the corresponding money is already available to pay the team.

Reconcile four different progress measures

Assume a hypothetical $10,000 project has incurred $5,000 of delivery cost. Of that amount, $4,000 has been paid and $1,000 remains unpaid. Cumulative invoices total $3,000, including an initial $2,000 invoice that has been collected. The accounting team supplies a $6,000 earned-revenue amount for this example under the business's chosen policy; the worksheet does not determine that policy.

Under the stated simplification, earned revenue exceeds invoicing by $3,000, while invoicing exceeds receipts by $1,000. These are different gaps. The first concerns billing progress relative to the supplied earning measure; the second is an outstanding invoice. Neither amount should simply be added to today's cash balance. The project has paid $2,000 more cash than it has received so far.

Forecast the remaining cost and cash

Suppose the independent estimate of additional cost to finish is $2,500. Expected final cost is $7,500, and the result against the $10,000 fee is $2,500 before any costs excluded from this project boundary. Future project payments are $3,500: the $1,000 already incurred but unpaid plus $2,500 of new work. Counting the full $5,000 incurred cost again would duplicate payments already made.

If the full fee is ultimately collected, future receipts total $8,000. That includes the $1,000 currently invoiced but unpaid and $7,000 still to be invoiced. The future net cash improvement is $4,500. Combined with the current $2,000 net cash commitment, the completed-project cash result is $2,500, matching the defined final economic result under these assumptions.

Keep operational and accounting labels distinct

Maintain task progress and billing prerequisites alongside the monetary ledger. Work can be physically complete but awaiting an approval needed before invoicing under the entered terms. An invoice may also be issued in advance of the work. These cases make a single percentage-complete field inadequate for forecasting receipts.

Reconcile receipts to invoices and costs to both the supplier ledger and time records. Owner labor assigned an economic value may differ from an actual cash payment, so disclose it separately when present. This example excludes that difference to make the bridge inspectable. It does not prescribe contract-asset valuation or revenue recognition; it explains why paid, incurred, earned, billed, and collected amounts must remain separate in a project cash plan.

Method references: OpenStax: Adjustments and Accruals. Accessed October 22, 2026. All dollar figures are hypothetical worked examples.