Review work in progress, billing, and realization

Direct answer

Review each engagement’s recorded work, amounts eligible for billing, invoices, adjustments, and receipts. Billing realization describes how much billable work reached an invoice; collection measures what was paid. Keep both separate from the accounting treatment of unbilled work.

Why this question comes up

Unbilled time may be waiting for a milestone, approval, or a pricing decision. Age it by engagement and assign the next action, rather than assuming every hour will be invoiced or written off.

Records to gather

• Time and expenses by engagement, including billable status
• Signed terms: hourly, capped, fixed-fee, or milestone billing
• Invoices, credits, pre-invoice reductions, and post-invoice write-offs
• Unbilled-work aging and billing holds
• Receipts applied to invoices and open balances

Review workflow

1. Define WIP for this review. List recorded work not yet invoiced and show its age, contract, and billing status. The operational WIP list is not automatically the balance-sheet contract asset.
2. Calculate billing realization where the contract supports it. For hourly work, compare billed hours or value with billable hours or value on the same basis. Show pre-invoice reductions separately.
3. Check collections separately. Match receipts and credits to issued invoices. A late payment affects collections, not the billing-realization rate.
4. Review holds and adjustments. Explain whether an item waits on a milestone, client approval, missing time, a fee cap, a dispute, or a write-off. Assign an owner and next date.
5. Handle fixed-fee work on its own terms. Extra hours do not create extra billable revenue unless the agreement allows it. Compare fee with delivery cost and scope changes instead.
6. Reconcile to accounting policy. Revenue or a contract asset can be recognized before invoicing when the applicable contract and accounting rules support it. Have the accountant confirm that treatment; do not infer it from WIP age.

What a useful answer should include

• Unbilled-work aging, terms, and next action by engagement
• Billing realization and collection rate with separate denominators
• Pre-invoice reductions, credits, and write-offs separated
• Fixed-fee cost overruns distinguished from unbilled hourly work
• Missing time, contract, or receipt records that limit the review

Common failure modes

• Calling unpaid invoices unbilled WIP. Once invoiced, track the unpaid amount in receivables and collection status.
• Calling all WIP deferred revenue. Billing and revenue recognition follow different tests.
• Using one rate for billing and collection. State both numerators and denominators.
• Assuming the connected ledger has all time records. Supply the engagement and time data if it is kept elsewhere.