Manufacturing · Trade

WIP (Work in Progress) is stock that’s been started but isn’t finished or sold yet. It’s “money on the factory floor” — materials + labour already spent, waiting to turn into a paid invoice.

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Why WIP matters for cashflow

WIP grows when you’re building inventory or producing jobs that haven’t been billed/paid yet. That can be totally healthy — but it often creates a timing gap between spend now and get paid later.

  • Cash gets trapped in materials and labour before payment lands.
  • Margins can look strong but bank balance looks tight during build periods.
  • Statements show pressure when supplier outflows arrive faster than customer inflows.
Where lenders “see” WIP
Bank larger supplier runs before matching deposits
AR/AP payables rising while receivables lag
Reports inventory + WIP values increasing month-to-month
Narrative “busy” business but cash tight during production cycles
Common WIP pattern (quick checklist)

If this looks like you, you’re not “unprofitable” — you’re often just bridging timing.

  • Materials paid weekly, customers pay on completion or 30 days.
  • Big build month before delivery month.
  • Payroll + subcontractors hit before progress claims land.
  • One big order makes you look “cash-poor” temporarily.

Real example: a small manufacturer takes a large production run. Supplier invoices and wages hit in week 1–3, but the customer pays 30 days after delivery. WIP balloons, cash dips, and the business needs a clean bridge.

Decision clarity

If your WIP cycle is squeezing your statements, the “right tool” is usually about timing: a Business Line of Credit for rolling gaps, Working Capital Loans for set terms, or Invoice Finance once invoices are issued.

Start here: Business Line of Credit, Working Capital Loans, Invoice Finance. If you’re also buying plant/machinery during growth, asset funding belongs under Low Doc Asset Finance.

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WIP FAQs
Is WIP the same as inventory?

No. Inventory can include finished goods ready to sell. WIP is partially completed work — not ready for sale yet.

Does high WIP mean my business is unhealthy?

Not automatically. High WIP often happens during growth or large jobs. The key is whether you can bridge the timing gap cleanly.

What do lenders want to understand about WIP?

They want the story: why cash dips, when payments land, and what controls exist (quotes, progress claims, job schedules, margins).

What’s the fastest way to reduce WIP pressure?

Tighter progress billing, shorter payment terms, staged deposits, and a facility that matches your cycle (not random short-term patches).

This glossary page is general information only and doesn’t consider your objectives or financial situation.