Work in progress (WIP)

Definition

Jobs started and unfinished on closing day: costs spent, nothing billed yet.

Why It Matters

In any trade that quotes a job and finishes it weeks later, this is the largest number nobody negotiates: the seller spent the materials and the labor, the customer pays you, and whoever wrote the purchase agreement decides who keeps that cash. Get a job-by-job schedule with cost incurred and amount billed, settle it inside the working-capital peg rather than as a side letter, and treat a seller who cannot produce the schedule as a seller whose books do not track it.

In numbers: A roofing company with $180,000 of started-and-unbilled jobs at closing is handing over roughly 12% of a $1.5M purchase price in value or in cost, depending entirely on who the agreement says owns it.