Choosing the Right WIP (Work in Progress) Method for Your Business Central Projects

Managing projects in Microsoft Dynamics 365 Business Central isn’t just about tracking tasks—it’s about timing your revenue and cost recognition. That’s where WIP (Work in Progress) methods come into play.

Whether you’re in construction, services, or implementation—your project accounting can get messy fast. WIP helps clean that up.

Let’s explore the five WIP methods through simple scenarios to help you choose the right one.

5 WIP Methods in Business Central—With Scenarios!

1. Cost Value

“I spend a lot upfront, billing comes later.”

This method calculates WIP based on actual project costs. It defers those costs to the balance sheet until you’re ready to recognize them.

 Scenario:

You’re building a factory. You spend ₹25 lakh on materials and labor in the first 3 months but won’t invoice the customer until completion. You don’t want those ₹25 lakh to hit your P&L yet.

What happens:

Costs get moved to a WIP account, so your P&L stays clean.

WIP = Costs Incurred

2. Sales Value

“I raise invoices early—before completing work.”

This method calculates WIP based on billable sales value, regardless of actual cost incurred.

 Scenario:

You sign a ₹20 lakh IT project. In Month 1, you invoice ₹5 lakh for kickoff and initial planning—even though you’ve barely incurred costs.

What happens:

That ₹5 lakh revenue sits in the WIP account until you’ve actually done that much work.

WIP = Revenue Billed (or Billable) – Work Performed

3. Cost of Sales

“I bill monthly and want a straightforward approach.”

Here, there is no WIP. Costs and revenues hit your P&L as soon as they’re posted.

Scenario:

You run a monthly maintenance contract. Every month, you invoice ₹1 lakh and spend ₹70,000 on service staff.

What happens:

Both ₹1 lakh and ₹70,000 show up in your P&L that month—no balance sheet entries, no deferrals.

Simple: Revenue – Cost = Monthly Profit

4. Percentage of Completion (POC)

“I want my financials to reflect actual progress.”

This method tracks job progress and calculates revenue based on how much of the job is completed.

Scenario:

You’re doing a ₹60 lakh construction job. You’ve completed 40% of the work and spent ₹20 lakh so far. Your system calculates revenue as 40% of ₹60 lakh = ₹24 lakh.

What happens:

Business Central adjusts both revenue and cost based on progress—not just what’s billed or spent.

% Completion = Actual Cost ÷ Estimated Cost

Recognized Revenue = % Completion × Contract Value

5. Completed Contract

“I only recognize anything after the job is fully done.”

This method holds everything—revenue and cost—until the project is completed.

Scenario:

You’ve been hired to deliver a complex machine. The contract clearly states: “No billing or revenue recognition until handover.”

 What happens:

You might spend ₹10 lakh and do months of work—but nothing shows up in your P&L until the machine is delivered and accepted.

Recognize all revenue and cost only at job completion

Quick Table Comparison

Over to you!

Which WIP method do you think suits your projects?

Have you used Percentage of Completion before? Or do you prefer a simpler Cost of Sales approach?

I Hope you found this blog useful, and if you would like to discuss anything, you can reach out to us at transform@cloudfonts.com.