WIP and Unbilled Revenue: The Services Firm's Silent Cash Leak
Unbilled revenue is real work aging into disputes and write-offs. Where WIP accumulates in services firms, how to age it honestly, and the operating rhythm that keeps it moving.
What you'll learn
- Why unbilled balances grow in healthy-looking firms
- Aging WIP honestly, and what each bucket means
- The weekly rhythm that keeps WIP moving to invoice
- Write-off patterns as a diagnostic, not just a loss
Every dollar of unbilled WIP is work you financed. The older it gets, the less of it you will ever collect.
What's inside
Between the hour worked and the invoice sent sits WIP: real cost incurred, real value delivered, no cash in sight. Some WIP is structural, work awaiting a milestone. The rest is drift: unbilled hours waiting for someone to assemble, review, and release an invoice.
Drift compounds. The older unbilled work gets, the harder it is to explain on an invoice and the easier it is to write off.
- 1
Where WIP piles up
Partner review queues: invoices drafted, awaiting a busy person
- 2
Age it honestly
Age WIP per project in 30-day buckets and treat each bucket differently. Current WIP is operations. Sixty-day WIP is a conversation. Ninety-day WIP is a collection risk wearing an accrual costume, and your recognition policy should get more conservative as the buckets age.
- 3
The weekly rhythm
Timesheets complete weekly, enforced by name, no exceptions culture
- 4
Read your write-offs
Write-offs are a diagnostic. Coded by reason (scope, quality, delay, courtesy) and reviewed quarterly, they tell you which clients, engagement types, and partners consistently turn work into losses.
Keep exploring Professional Services.
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