Is Your P&L Lying to You? Why Construction Businesses Can’t Ignore WIP Reporting

If the profit and loss statement for your construction business says you're doing great, but your bank account tells a different story, you're not crazy – and you’re not alone.

This disconnect happens all the time in construction. And it’s not just an annoyance. If left unchecked, it can completely undermine your ability to get financing, grow, or even continue operating.

Why It Happens

In project-based businesses like construction, revenue doesn’t always line up neatly with when you get paid – or when you do the work. That’s where WIP reporting (Work In Progress) comes in.

Without it, your financials are basically guesswork.

• You might show big “profits” on paper for work you haven’t finished yet.
• You might be sitting on cash you think is profit but it’s actually a liability for work not yet done.
• You might not even realize there’s a financial disconnect with one or more jobs until it’s too late to course-correct.

The Illusion of Profit

Let’s say you collect a big deposit upfront. That cash hits your account, and it feels good. Maybe your P&L even shows healthy revenue.

But if the project isn’t finished (or if those dollars are supposed to cover labor and materials still to come) you can’t count it as earned income. You still owe that work. That money isn’t profit. It’s just timing.

Without a solid WIP process, it’s easy to get lulled into a false sense of security:

• You hire ahead of actual revenue
• You spend cash you haven’t really earned
• You think a project is profitable… until it suddenly isn’t

And that’s how businesses with full pipelines and strong P&Ls end up in cash crises. Or worse, bankruptcy.

What WIP Reporting Actually Does

A good WIP report gives you a real-time picture of:

• How much of each job is complete
• How much revenue you’ve truly earned so far
• Where your cash flow exposure is
• Which jobs are tracking on budget and which aren’t

It turns your gut instincts into data. And it helps you catch issues before they become disasters.

Most Owners Skip This Until It’s Too Late

If you’ve grown fast and never had to build this discipline, you’re not alone. A lot of $2–6M contractors are still running without real WIP tracking. But once you cross that threshold (more projects, more employees, more cash movement), you can’t afford not to know.

Want to Know if Your P&L’s Telling the Truth?

We offer a free construction financial assessment focused on helping owners get clear on what’s actually going on in their business.

It’s quick, no-pressure, and totally confidential. Whether you’re doing $3M or $30M, it’ll help you see if your P&L is telling the whole story or just the part you want to hear.