Clearing WIP When a Project is Closing

For fee-type projects, what is the appropriate method to handle work-in-progress (WIP) accumulated after the last invoice has been sent?

There are three ways to handle this situation in Ajera. One method will cause the WIP to appear as a write-off on your financial reports and your project reports. The second method will clear your financial reports and your project reports of WIP but not show it as a write-off. The last method will move the cost from billable to nonbillable and clear the WIP.

Option 1: Write off the WIP
Once the project is complete, change the invoice status from Draft to Write-off. Use no cut-off date for the invoice.

  1. Select Manage > Client Invoices to open the Client Invoice List window.
  2. In the Status column, after making sure no billing cut-off date is being used, click the arrow button for the invoice and select Write-off from the drop-down list.
  3. Press the Tab key for the change to take effect, and then click the Close button. This action clears the WIP by crediting the WIP asset accounts and debiting the Write-off income accounts on your financial reports.
  4. To close the project to prevent more WIP from being entered against it, select Setup > Projects. The Project Command Center appears.
  5. Select the project from the list at the top left, and on the General subtab of the Project Info tab, click the arrow button in the Status field and select Closed.
  6. Click the Save button to save the changes to the project, and click the Close button to close the Project Command Center.
  7. To confirm the change, select Reports > Session Journals and double-click the most recent session in the list (it will be at the top). Go to the General Ledger Recap page of the journal, and you should see a credit to a WIP account and a debit to a write-off account.
  8. To see how this change affects your projects, open the Project Earnings report under Reports > Project > Project Earnings. The write-off amount should be reflected in the write-off column for the project.
Use the Project Earnings report to see the exact detail of the labor, expense, or consultant activities that were written off. Click the project name to drill down, and then click the name of a phase with a non-zero amount in the Write-off column to drill down further. Look for a row with a non-zero amount in the Write-off Amount column, and click the plus sign + at the far left of the row to expand the view. The dates, cost amount, spent amount, and other details about the write-off appear.

 

To determine when the write-off was actually performed and by whom, first open the Ledger report under Reports > Financial > Ledger drill down into your write-off income accounts, and when you find the debit entry for the project, date, or amount, click the text to find the session journal number. Then use that number in your session journals under Reports > Session Journals to see what date the write-off occurred and who completed the write-off.

Option 2: Clear the WIP without a write-off
Once the project is complete, print a final zero-amount invoice:

  1. Select Manage > Client Invoices to open the Client Invoice List window.
  2. Select the invoice, and click the Edit button to verify that there are no current fee billing amounts and that the attached WIP all have the status of Billable.
  3. You can review the attached WIP by clicking that phase on your fee billing type tab and then clicking the Entries button at the top left of the window.
  4. In the entries window, click the Change View button and verify that all entry statuses are selected.
  5. If any WIP has the status of Defer or Hold, change it to Billable. Leave nonbillable and write-off entries alone. Click OK.
  6. Save the invoice, and return to the Client Invoice List window.
  7. Make sure that invoice is selected, and click the Print button.
  8. For the Print As option, select Final. Enter an Invoice Date and Accounting Date (one that you would like the removal of the WIP on the general ledger to reflect as). Enter the invoice number of "1 WIP Clearing" to indicate why you are printing a zero invoice and to easily find it in the future, and then click OK. Note: you will need a number in the invoice number.
  9. In the Print window, click OK to print the zero-amount invoice. This action clears the WIP by crediting the WIP accounts and debiting the Unbilled Revenue accounts (sometimes known as Unbilled Professional Fees) on your financial reports.
  10. To close the project to prevent more WIP from being entered against it, select Setup > Projects. The Project Command Center appears.
  11. Select the project from the list at the top left, and on the General subtab of the Project Info tab, click the arrow button in the Status field and select Closed.
  12. Click the Save button to save the change to the project, and click the Close button to close the Project Command Center.
  13. To confirm the change, select Reports > Session Journals and double-click the most recent session in the list (it will be at the top). Go to the General Ledger Recap page of the journal, and you should see a credit to a WIP account and a debit to an unbilled fees account. You can also look at the WIP aging report under Reports > Project > Work in Progress Aging to verify that the WIP is cleared.
Option 3: Clear the WIP by changing the WIP from Billable to Nonbillable
Once the project is complete, print a final zero-amount invoice:
  1. Select Manage > Client Invoices to open the Client Invoice List window.
  2. Select the invoice, and click the Edit button.
  3. Select the phase that has the WIP remaining, and click the Entries button at the top left of the window.
  4. Change the WIP status to Nonbillable unless it says Write-off, in which case the WIP has already been removed; save the changes. This action clears the WIP by crediting the WIP accounts and debiting the Unbilled Revenue accounts (sometimes known as Unbilled Professional Fees) on your financial reports.
  5. Changing these WIP items from Billable to Nonbillable changes the cost on your financial reports (if you are tracking Billable and Nonbillable amounts separately) from Billable to Nonbillable. The Spent value that was associated with the entries is now 0. Nonbillable transactions have no Spent amount.
  6. To close the project to prevent more WIP from being entered against it, select Setup > Projects. The Project Command Center appears.
  7. Select the project from the list at the top left, and on the General subtab of the Project Info tab, click the arrow button in the Status field and select Closed.
  8. Click the Save button to save the change to the project, and click the Close button to close the Project Command Center.
  9. To confirm the change, select Reports > Session Journals and double-click the most recent session in the list (it will be at the top). Go to the General Ledger Recap page of the journal, and you should see a credit to a WIP account and a debit to an unbilled fees account. If this had been a write-off, a write-off account would have been debited, instead.