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Work in Progress (WIP) revenue recognition is a method used by project-based businesses to recognize income based on the percentage of work completed—regardless of when the invoice is issued or payment is received. In other words, you track what’s earned, not just what’s been billed.
This approach is especially valuable for:
While many firms default to recognising revenue based on invoices, this creates a mismatch between effort and earnings - a problem WIP helps solve.
For many firms, revenue is only tracked when an invoice is sent. On the surface, it’s straightforward, but when you dig deeper, relying on invoices alone to track progress introduces blind spots that can hurt financial clarity and operational performance.
The invoice-based model may work for projects that are less complex or operate on shorter delivery cycles, but for most professional services firms, it introduces unnecessary risk.
Let’s ground the concept in a practical example.
Here’s the problem: your financials show only $25K in revenue, even though the team has delivered nearly half the work. This affects:
With WIP recognition:
WIP recognition provides a dynamic view of earned income across projects, accounts, and teams. This is especially important for founders, CFOs, and operations leads trying to steer the business confidently
With WIP, you can:
Revenue data that's tied to real delivery is far more useful than invoicing alone. WIP gives leaders the data they need to plan accurately.
Benefits include:
Example: A CFO using Magnetic can forecast agency revenue for Q3 based on project completion rates across 12 accounts, not just issued invoices.
Untracked time. Forgotten tasks. Delayed billing. It adds up.
WIP reveals those gaps in real-time:
Top leakage sources WIP can flag:
Agencies using WIP often recover 5–15% of missed revenue within the first few months of implementation.
WIP The WIP revenue recognition model creates a shared language between delivery and leadership and provides a more accurate picture for leadership on how their teams are spending their time.
With WIP in place:
This alignment reduces tension between teams and helps everyone make smarter decisions.
For firms operating in regulated industries or simply aiming to reduce risk WIP improves transparency and compliance. Here’s how:
WIP-based reports help client-facing teams tell a more accurate story, that inevitably builds better rapport. Instead of simply reporting on logged project hours, they can clearly demonstrate the project completion rate and what's been achieved.
This transparency builds trust – here's how:
In retainer relationships, using this approach is powerful because it proves the ROI of your work, month over month.
Making the switch doesn't mean having to re-invent your business model, but it does require you to relook your systems and practices.
When making the shift from invoices to WIP, the right tool makes all the difference. Look for tools that support features like:
Magnetic, for example, gives teams a visual view of progress, syncs time entries, and shows how much revenue has been earned based on what’s been delivered
Before you track anything, align internally on how revenue will be recognised within your organisation.
Make sure everyone - from project managers to finance - uses the same rules.
WIP success depends on team behaviour.
Don’t roll out WIP to the entire business at once. Pick a few projects to pilot, and then expand to the broader business once the model has been proven. You could start by testing:
Test the process, gather feedback, and iterate before scaling.
Most professional service firms already track hours, deliverables, and budgets, but few connect those pieces into a clear picture of what’s actually been earned. That’s what WIP revenue recognition offers: a more intuitive, real-time lens on performance, profitability, and progress. Not only does it help improve reporting, but builds a more predictable and resilient revenue engine – where finance and leadership work from the same data.
And while implementing WIP used to be complex, platforms like Magnetic make it far more accessible. From time tracking and budget oversight to real-time revenue dashboards, Magnetic helps professional service firms make the shift without adding operational overhead.
If you're ready to connect delivery to revenue and unlock the visibility your team needs to grow Book a Demo or Try Magnetic Free for 14 Days.
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Work in Progress (WIP) revenue recognition tracks income based on how much of a project has been completed, rather than when invoices are sent. It provides more accurate, timely financial insights.
WIP is ideal for service-based firms that bill by the house - Agencies, consultancies, engineering firms, and internal teams managing complex or long-term projects. If you can’t recognise all revenue in a single invoice, you’ll likely benefit from WIP.
Adoption starts with culture and tools. Use platforms like Magnetic that automate time logging prompts and tie effort to visible progress and earned value.
Absolutely. The WIP revenue recognition model shows how much has been earned vs. how much time has been spent, making it easier to catch overservicing and scope creep before it compounds.
Yes. Magnetic is designed for agencies and professional services firms. It tracks time, tasks, project progress, and budgets—then automatically calculates earned revenue for reporting and finance.
WIP revenue is typically calculated using the Percentage-of-Completion method. This can be based on: Time logged vs. total estimated hours Milestones completed vs. total project scope Tasks delivered vs. planned deliverables. For example, if a $100,000 project is 40% complete based on logged hours or task completion, $40,000 can be recognized as earned revenue, even if only $20,000 has been invoiced. Tools like Magnetic automate this calculation using live project data.
Magnetic is an all-in-one workflow management platform designed and built for professional services firms.
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