| 3:22p |
WIP It Good
I am such a moocher - I keep reading everyone's posts and not providing any reading material myself. It's been so long since I updated that now it seems like I have way too much to update about, so I put off updating, which then makes me have even more to update about...it's a vicious cycle.
Anyway, I've been at my job for almost 4 months now and it's going really great, except for the part where I have to clean up all the messes the last guy made. We'll call him Putty because he talks just like him. So Putty apparently thought it was ok to "round to the nearest 100" even though he is a freaking accountant and that's pretty much blasphemey, and to compound this he never reconciled. I have finally reconciled all our GL accounts and cleaned up any messes there, but one of my bosses still feels some sort of weird connection to Putty and keeps defending him (not that I'm attacking him, but after I tell him that most of the employee's payroll deductions are wrong and he asks why...well there's not much else to say except "Putty screwed up.").
Ok, quick accounting lesson so I can tell you my WIP story:
Companies generally use the accrual accounting method, which means that they generate income when they generate a bill, not when that bill gets paid (when they actually receive cash, which would be the cash accounting method). So if a company bills early, before they have finished the work (which you have to do in an engineering firm because general contractors take freaking forever to pay), the part you didn't actually earn is unearned revenue. On the flip side, when you have done billable work and haven't billed for it yet, it is called unbilled services. This happens when there's any sort of "work in progress" job. Technically the unearned revenue and the unbilled services are both income, they are just put towards a different GL account. Such is the life of Work In Progress (WIP) accounting. It's super complicated and delicate, and most of you probably read the first sentence in this paragraph and either feel asleep or switched over to facebook. It's cool.
Anyway, every month I generate WIP* reports and go over them in detail with the owner and depending on how far ahead we've billed on certain jobs I will recognize some of the unearned revenue if we believe we will be coming out ahead of budget. Basically I lie to the accounting software and tell it that we're farther ahead then we actually are.
SOOOOOOOOO (I know most boring blurty entry ever), this month we barely billed anything, and we barely recognized any income from when we billed way ahead last month, so not only was our income low, but our unearned revenue from last month took away from our actual income. So our monthly net income was way in the negative. Even though I explained this several times to the owner, he told me to call Putty and have him look at it. Seriously?!?! The guy that cost you thousands of dollars last year by "rounding to the nearest 100", never reconciling, and freaking doesn't understand that when you prepay for something it is an asset that needs to be expensed not a liability that needs to be accrued (I had to explain to him how prepaid insurance works like 500 times on my second day).
So I complained to Tom about it and he said it was because Putty is older then me and he is a man. Lame.
*Totally reminds of the Chandler and the WENIS. |