Your Restoration WIP Schedule Is Read by Your Bank and Surety

Your bank and your surety may be reading a financial report you do not produce. It is your work-in-progress schedule, and for a growing restoration or reconstruction company it matters as much as the P&L.

Most owners think of the WIP schedule as an internal accounting chore. The people who decide how much credit and bonding you get tend to treat it as the best view they have into whether you can execute.

What the underwriter is actually reading

An article on surety underwriting from American Global, published by the International Risk Management Institute (IRMI) in May 2023, describes the focus on WIP plainly. It says a WIP schedule "provides underwriters with project-specific data that they can track across accounting periods." That is the key phrase. They are not looking at one month. They are looking at the same job, month after month.

The same article names what they watch for. Underwriters want "to see any changes (e.g., job gain/fade) to the profit estimate throughout the life of the project," and it calls margin fades "a red flag that underwriters will want to understand." It also flags late-stage overbilling as a possible sign of job borrowing, and says sureties will want to understand how a contractor executes change orders.

That is one industry source describing how underwriters read WIP, not a rule every lender follows. Your own surety agent and banker will have their own checklist. But the pattern is consistent with how most people reading a contractor's numbers think: they are asking whether your profit estimates can be trusted.

Why this lands harder in restoration

A restoration company usually has three things a reader of WIP will want explained.

Scope that is discovered, not bid. Demo reveals more damage. The estimate was a starting point, and if supplements lag the work, margin on the schedule fades month after month. Our post on why profit fades on a WIP schedule shows the mechanism.

Billing that follows a carrier, not your progress. Underbilled jobs mean you are financing the work, and we covered underbillings and overbillings in earlier posts. A reader of your WIP sees both, and wants to know which is which and why.

Volume that spikes. A storm can triple your open jobs in a month. That is exactly when a lender or surety wants to see that your estimates, billings and cost tracking hold up at the larger size.

A clean schedule answers those questions before anyone asks. A messy one, or none at all, makes the reader assume the worst, or simply say no.

Credit and bonding are growth capacity

If your credit line and bonding limit decide how many jobs you can mobilize at once, then they decide how big you can get. Our post on setting up a credit line in the quiet month covers the sizing side. The WIP schedule is the evidence that supports the ask.

Here is the part I would push on. Sloppy WIP does not usually get you a loud rejection. It quietly caps your limits. You get a smaller line than you wanted, a bond program that does not grow, or a request for more collateral, and nobody tells you the schedule was the reason.

Four moves

1. Produce a WIP schedule every month. One row per open job: contract value, estimated total cost, cost to date, percent complete, billed to date, over or under billing. Close it on a fixed day, not when someone asks.
2. Keep a history. Underwriters track the same job across periods, so save each month's schedule and be able to say why a margin moved.
3. Update estimated total cost when scope changes. Do not leave the original estimate on the schedule while discovered scope piles up. Paper supplements and change orders the same week they are discovered.
4. Explain the exceptions before you are asked. A one-line note on any job with fading margin, large underbilling or late-stage overbilling shows control, and control is what they are buying.

Also ask your own surety agent and banker what they want to see and how often. Their format and timing requirements are the ones that count.

Building a monthly WIP schedule your lender and surety can trust, and the job costing that feeds it, is a core part of what a fractional CFO for restoration companies does. If your schedule is not where you want it before your next renewal, get in touch.

General education for restoration and reconstruction owners. Surety and lending practices vary by provider, and this is not lending, bonding, tax, legal or accounting advice for your company.

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