Measuring Practice WIP Performance with Xero Practice Manager
Measure WIP movements, write-offs, and billing performance with clearer practice reporting.
Video Overview
Understanding WIP Performance in an Accounting Practice
Work in progress, commonly referred to as WIP, is one of the most important measures for understanding how an accounting practice is performing. It shows the value of work completed but not yet invoiced, and provides a clear view of whether the practice is converting effort into revenue efficiently.
A WIP Performance Report gives a practice visibility over its work in progress movements across multiple periods. Rather than looking at one month in isolation, the report is most useful when reviewed over a 12-month period, as this allows trends to become visible. It includes the opening WIP balance, time entered, disbursements added, invoices raised, write-ups, write-offs, and the closing WIP balance.
The WIP formula is straightforward. Opening WIP is increased by time and disbursements added during the period, reduced by invoices, and adjusted for net write-ups or write-offs. The closing WIP balance then becomes the opening WIP for the next period. This creates a continuous picture of how WIP is moving through the practice.
Two useful performance measures are the WIP multiple and the write-off percentage. The WIP multiple shows how much WIP is being carried compared with the amount of work completed in the period. A lower WIP multiple is generally better, because it means less value is sitting unbilled and more value is being turned into cash. The write-off percentage shows the value of net write-offs compared with the time and disbursements added during the period. This helps identify whether work is being priced, managed, and recovered effectively.
A strong WIP report should include every timesheet, disbursement, and invoice, so the data gives a complete view of practice performance. This is especially valuable in Accounting Practice Management, where reliable reporting depends on accurate underlying transactions.
Reviewing WIP performance monthly helps firms identify problems early, such as growing unbilled balances, high write-offs, or particular client groups requiring closer attention. Reports can also be filtered by client, client group, category, or partner, then scheduled for managers or leadership teams. Over time, this creates a clearer understanding of performance and supports better decisions across the practice.