On contract work your profit and your bank balance stop agreeing with each other. A work in progress schedule shows what you have actually earned. A retainage report shows what is being held back. Between them they explain why a profitable year can still feel tight.
If you only do service calls this does not apply to you. The day you take contract work that runs longer than a billing cycle, it does.
A deposit or a front-loaded draw lands and the account looks healthy. It is not profit. It is money you owe in labor and material you have not spent yet, and it will leave again.
The crew is three weeks ahead of the paperwork. That is finished work sitting on the schedule as nothing at all, funded entirely out of your own cash.
Retainage on a GC job is your profit, held until closeout. Get enough of it out there at once and you have financed somebody else's project with your operating cash.
Percent complete is just costs spent divided by costs expected. Earned revenue is the contract multiplied by that percentage. Compare earned against billed and you find out who is funding whom.
| Job | Contract | Cost to date | Est. total cost | % complete | Earned | Billed | Over or under |
|---|---|---|---|---|---|---|---|
| Northside medical | $215,000 | $79,000 | $158,000 | 50% | $107,500 | $86,000 | $21,500 under |
| Warehouse lighting | $84,000 | $44,250 | $59,000 | 75% | $63,000 | $52,000 | $11,000 under |
| Retail buildout | $126,000 | $27,600 | $92,000 | 30% | $37,800 | $50,000 | $12,200 over |
| School gym rewire | $46,000 | $29,700 | $33,000 | 90% | $41,400 | $41,400 | Even |
| Total | $471,000 | $180,550 | $342,000 | 53% | $249,700 | $229,400 | $20,300 under |
Two things fall out of this. You have $32,500 of finished work that has never been invoiced, which is your cash funding someone else's building. And the retail buildout is billed $12,200 ahead of the work, so part of that healthy bank balance is not yours to spend. Without this schedule both of those are invisible, and the second one is how a shop convinces itself it is having a good quarter.
Retainage is the slice a GC or owner holds back until the job closes out, usually five or ten percent. On most contract work it is roughly the whole profit margin. Aged out far enough, it stops being a receivable and starts being a problem.
| Job | Contract | Held | Amount | Days outstanding |
|---|---|---|---|---|
| Northside medical | $215,000 | 10% | $21,500 | 45 |
| School district gym | $168,000 | 10% | $16,800 | 120 |
| Retail buildout | $96,000 | 5% | $4,800 | 210 |
| Warehouse lighting | $54,000 | 10% | $5,400 | 30 |
| Total held | $533,000 | $48,500 |
Sample: same 6-truck shop, metro Atlanta. Yours gets built from your contracts.
That $48,500 is close to a full month of crew payroll for a shop this size, and it is sitting in four other companies' bank accounts. The $4,800 at 210 days is the one that should bother you. Nobody is going to remind you it is out there. Retainage gets collected by the shop that tracks it and written off by the shop that does not.
A surety will not increase your single job or aggregate limit without a current WIP schedule. It is the first document they ask for, and producing it quickly is part of how they read you as a risk.
A line of credit on contract work gets underwritten against your billings and your backlog. A shop that can show earned versus billed by job borrows on better terms than one that shows up with a P&L.
The schedule tells you how much work you already have committed and what it is costing to carry. That is the honest answer to whether you can take on the next big job or whether you are about to run out of cash halfway through it.
WIP and retainage reporting is available to Two-Phase clients doing contract work. Setup is scoped on your free books review.
No. If you invoice the job the week you finish it, there is nothing in progress to report on and nobody is holding retainage. This page is for shops taking contract work that spans a billing cycle. If that is where you are heading, it is worth setting up before you get there rather than after.
Monthly for most shops, which is what a bonding agent and a bank expect. If you have several large jobs running at once we can move it to a shorter cycle. What matters more than frequency is that the cost to complete estimate is refreshed honestly each time rather than carried forward.
You do, and we will push back on it. That figure is the only judgment call on the schedule and it is where trouble hides, because a job that is running over looks fine right up until somebody admits there is more left to do than the estimate says. Our job is to ask the uncomfortable question every month, not to pick the number for you.
Related, and one depends on the other. Job costing tells you what a job made once it is done. A WIP schedule tells you where a job stands while it is still running, and whether your billing is keeping up with the work. You cannot build a trustworthy WIP schedule without job costs coded correctly underneath it. See how job costing works.
We track it, age it and tell you what to chase and when, and we will draft the follow-up. We are not a collections agency and we are not attorneys, so if something has gone genuinely bad and lien deadlines are in play, that is a conversation for your attorney. Most retainage is not bad debt. It is just nobody's job to remember, and that is fixable.
Bring your open jobs to a free books review and we will build the first WIP position with you on the call.