In Microsoft Dynamics 365 Business Central, the setting shown in the image, "Default WIP Posting Method," determines how the system will post Work in Progress (WIP) for jobs by default. The options, "Per Job" and "Per Job Ledger Entry," reflect different levels at which the system can calculate and post WIP amounts.
Per Job
When "Per Job" is selected as the Default WIP Posting Method, WIP calculations and postings are performed at the job level. This means that WIP entries are summarized and posted for the entire job.
Example: Consider a construction job with a total budget of $1 million. If you're 30% through the job based on costs incurred or work completed, and you've set your WIP method to "Per Job," then when you run the WIP calculation, it will post a single entry to your financials that reflects 30% of the total job value as WIP. This single entry simplifies the WIP process but gives less granular detail about individual transactions.
Per Job Ledger Entry
If "Per Job Ledger Entry" is selected, WIP calculations and postings are done at a more granular level for each ledger entry related to the job.
Example: Using the same construction job example with a $1 million budget, if you have incurred costs for various aspects such as labor, materials, and subcontracting, each ledger entry will be evaluated individually. If you've used $100,000 in materials and $200,000 in labor up to a certain point, the WIP calculation will post separate entries for materials and labor. This provides a more detailed view of WIP, showing precisely where costs are being incurred.
Implications
The implication of the "Default WIP Posting Method" setting is significant in terms of how job costs and revenue are recognized over the life of the job.
- Reporting: The "Per Job" method provides a high-level view, which is simpler but less detailed. The "Per Job Ledger Entry" method offers more detailed reporting, which can be useful for tracking job progress and profitability more closely.
- Job Management: For project managers, the "Per Job Ledger Entry" method provides more actionable data, enabling them to pinpoint which aspects of the job are over or under budget.
- Financial Management: The level of detail in financial records can impact decisions related to cash flow management, job financing, and even tax considerations.
Choosing the right default WIP posting method depends on the business's need for detail, the complexity of jobs, reporting requirements, and the resources available for job management. Smaller businesses or those with simpler jobs may prefer the "Per Job" method for its simplicity, while larger firms or those handling complex, multi-faceted jobs might opt for the "Per Job Ledger Entry" method for its granularity.
