Xero doesn't produce a construction work in progress (WIP) report. It records your invoices and costs, and it can show profit by job if you code everything to a tracking category or a project (Xero Projects, on the Ultimate plan, adds a profitability view), but it doesn't compare what you have earned on each job with what you have billed. That comparison is the whole point of a WIP report. Most builders on Xero build it in a spreadsheet each month from Xero exports plus job budgets. That is fine for a few jobs. Once you have more jobs, more people entering costs, or claims in a separate system, it becomes slow and easy to get wrong. This guide covers what a WIP report needs, the ways builders produce one around Xero, and when it is worth connecting the systems instead.
What a WIP report actually shows
For each job, a WIP report brings together:
- Contract value, including approved variations.
- Budgeted cost to complete the job.
- Costs to date: materials, subcontractors, labour and other direct costs.
- Percentage complete, usually costs to date divided by budgeted cost, or a site assessment.
- Revenue earned: contract value multiplied by percentage complete.
- Billed to date: progress claims invoiced so far.
- Over or under billing: the difference between earned and billed.
Over-billing means you have claimed ahead of the work, so some of that cash belongs to work you haven't done yet. Under-billing means you have done work you haven't claimed, so you are funding the job yourself. Both matter for cash flow, and both are invisible in a normal profit and loss report.
Why Xero alone isn't enough
Xero has three of the ingredients (costs to date, billed to date, and profit by tracking category or project) but not the others:
- Budgets and variations usually live in your estimating or job system, not Xero.
- Percentage complete isn't something Xero calculates for a contract.
- Timing: costs coded to the wrong job, or bills entered late, make the WIP wrong until someone notices.
- Tracking category limits: Xero allows two active tracking categories, so if you already use them for region or division, jobs end up squeezed into codes or projects.
Three ways builders produce WIP around Xero
1. A monthly spreadsheet
Export profit and loss by job (tracking category or projects) from Xero, add contract values, variations and budgets from your job files, and calculate earned versus billed. Enough when: up to a handful of jobs, one person responsible, and monthly is often enough. Watch for: formulas copied from last month, jobs missing from the export, and costs coded to the wrong job.
2. A job management system with WIP built in
Some construction and job management systems produce WIP or job profitability reports from their own data and send invoices to Xero. Enough when: all job costs, claims and variations go through that system. Watch for: costs that bypass it, such as supplier bills entered straight into Xero or payroll costs, which leave the WIP incomplete.
3. A connected WIP report
Job budgets and variations come from the estimating or job system, costs and invoices come from Xero (and payroll, if labour is costed separately), and a report joins them by job automatically. You open it on Monday and it is current, without anyone rebuilding it. Worth it when: you run many jobs at once, more than one entity, or the month-end WIP takes days and still gets questioned.
For example, if your budgets are in an estimating tool and your costs are in Xero, a connected report can match them by job number and flag jobs where costs are running ahead of the claims, before the end-of-year surprise.
Getting the basics right first
Whichever way you go, the same clean-up makes WIP reliable:
- One job code everywhere. The same job number in the job system, Xero and timesheets.
- Code costs when they are entered, not at month-end.
- Budgets updated for approved variations as soon as they are approved.
- A cut-off rule for bills and claims at month-end, so each WIP compares the same period.
Even if you stay with a spreadsheet, these four steps take most of the pain out of it.
Frequently asked questions
Can Xero produce a WIP report for construction?
Not on its own. Xero shows costs and income by tracking category or project, but it doesn't hold contract values, budgets or percentage complete, so it can't calculate earned revenue or over and under billing. Those come from your job system or a spreadsheet.
What is the difference between over-billing and under-billing?
Over-billing means you've claimed more than the work completed, so you're holding cash for work not yet done. Under-billing means you've completed work you haven't claimed yet, so you're funding the job yourself. A WIP report shows both, job by job.
How often should builders run a WIP report?
At least monthly, before management decisions and the BAS. Builders with many jobs or tight cash often want it weekly, which is only realistic if the report updates itself rather than being rebuilt by hand.
Do I need new software to get a proper WIP report?
Often not. If your job system handles budgets and claims and all costs flow through it, use its reports. If the information is split between an estimating tool, Xero and payroll, connecting them is usually cheaper and less disruptive than replacing them.
For a closer look at why WIP numbers go wrong, see Your WIP is lying to you. If your WIP takes days to build or nobody trusts it, see our construction WIP reporting service, or book a free initial chat and we'll tell you whether a spreadsheet, an app or a connected report fits your business.