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, and settle it inside the working-capital peg rather than as a side letter. Treat a seller who cannot produce the schedule as a seller whose books do not track it.

In numbers: A roofing company with $480,000 of started-and-unbilled jobs at closing is handing over roughly 12% of a $4M purchase price in value or in cost, depending entirely on who the agreement says owns it.