Work in Progress in Odoo: Operational and Finance Alignment

Introduction

A manufacturing order can be physically incomplete while already carrying real business value.

Raw materials may have been consumed. Labor may have been recorded. Work-center time may have been spent. Production may be partially completed. Yet the finished product has not reached inventory.

For operations, this is simply work in progress.

For finance, however, it raises a much more important question:

How much value is currently tied up in unfinished production?

When manufacturing and finance work from disconnected data, WIP becomes difficult to measure accurately. Production teams may track progress in Odoo while finance relies on spreadsheets or manual calculations to understand the financial impact.

This can create differences between operational reality and financial reporting.

A well-designed WIP process in Odoo connects manufacturing activity, inventory movements, production costs, valuation, accounting and period-end controls.

The objective is not simply to calculate a WIP number.

It is to create a reliable connection between:

Production Activity → Material Consumption → Labor/Operations → WIP → Finished Goods → Inventory Valuation → Financial Reporting

What Is Work in Progress in Manufacturing?

Work in progress represents products that have entered the manufacturing process but are not yet completed.

For example, a manufacturing order may require:

• Raw materials
• Components
• Machine time
• Labor
• Production operations
• Quality activities

If production is only partially complete at the reporting date, some of those costs may relate to unfinished goods.

A simplified production flow is:

Raw Materials → Production → WIP → Finished Goods

The accounting treatment depends on the company's accounting policies, valuation method, costing method and applicable standards.

Therefore, WIP should be designed together by operations, finance and the ERP implementation team.

1. Start With the Physical Production Process

Before configuring WIP in Odoo, understand how production actually works.

Map:

• Raw-material consumption
• Manufacturing orders
• Work orders
• Work centers
• Labor
• Machine operations
• Subcontracting
• Scrap
• By-products
• Quality checks
• Finished goods
• Production delays

Odoo supports one, two and three-step manufacturing flows, allowing businesses to structure how components and finished goods move through production.

The first question should therefore be:

At what point does material or production activity become part of unfinished production?

2. Define What WIP Means for Your Business

Not every unfinished activity needs the same financial treatment.

For example:

Simple Assembly

WIP may primarily consist of consumed components before the finished product is completed.

Complex Manufacturing

WIP may include:

• Components
• Direct labor
• Machine costs
• Production overhead
• Subcontracting costs

Project-Based Manufacturing

WIP may also depend on project progress, milestones, services and customer billing.

Therefore, define the WIP policy before configuring the ERP.

WIP Definition Framework

This prevents finance from developing a calculation that operations cannot support.

3. Connect Manufacturing Orders With Cost Information

A manufacturing order provides the operational foundation for understanding production progress.

It can connect:

Product → Bill of Materials → Components → Operations → Work Orders → Production Cost

Odoo's manufacturing cost functionality supports the analysis of production costs, while work-center and employee activity can contribute to production cost calculations. Odoo documentation also explains that finished-product valuation can include component consumption and labor costs.

The implementation should therefore determine which costs are:

• Planned
• Actual
• Allocated
• Accrued
• Capitalized
• Expensed

This distinction is important when designing WIP reporting.

4. Track Material Consumption Accurately

Material consumption is one of the most important inputs into WIP.

If production has consumed:

• Steel
• Chemicals
• Packaging
• Electronic components
• Subassemblies

those materials are no longer simply sitting in raw-material inventory.

They have moved into the production process.

Odoo's inventory valuation records valuation effects from stock movements, including component consumption and finished-goods production.

Therefore, inaccurate component consumption can directly affect both operational and financial visibility.

Controls should include:

• Correct Bills of Materials
• Accurate quantities
• Proper units of measure
• Timely consumption
• Scrap recording
• Lot/serial tracking where required
• Inventory reconciliation

5. Include Labor and Work-Center Costs Where Required

Manufacturing cost is not always limited to materials.

Production may also consume:

• Employee time
• Machine time
• Work-center capacity
• Setup time
• Processing time

Odoo's valuation documentation explains that finished-product value can include consumed component costs plus labor costs associated with work centers and employees.

The business should decide which operational costs should contribute to product cost and which should remain period expenses.

This is a policy decision not something that should be left entirely to technical configuration.

6. Understand the Difference Between Production Progress and Financial WIP

A common implementation mistake is assuming:

Production Progress = Financial WIP

They may be related, but they are not necessarily identical.

A manufacturing order may be 50% complete operationally while the financial value of WIP is not exactly 50% of the expected finished-product cost.

Why?

Because:

• Materials may be consumed early.
• Labor may occur at different stages.
• Overhead may be allocated differently.
• Some operations may have higher costs.
• Scrap may change actual cost.
• By-products may affect cost allocation.

Therefore, WIP calculations should be based on the organization's approved costing methodology.

7. Align WIP With Inventory Valuation

Inventory valuation determines how the financial value of inventory is represented.

Odoo 19 supports Standard Price, FIFO and Average Cost costing methods. It also supports periodic and perpetual inventory valuation approaches.

These choices influence how inventory and production values are represented.

For example:

Raw Materials → Consumption → Production → Finished Goods

must ultimately produce values that operations and finance can reconcile.

The implementation team should document:

• Costing method
• Inventory valuation method
• Valuation accounts
• Production accounts
• Variation accounts
• Closing process
• Accrual requirements

8. Create a Clear Month-End WIP Process

Month-end is where operational and financial alignment becomes most important.

Finance needs to know:

• Which manufacturing orders remain open?
• How much material has been consumed?
• How much production is complete?
• What costs have been incurred?
• What value remains in unfinished production?
• Which orders are delayed?
• Are there unusual variances?

A practical monthly process is:

Open Manufacturing Orders → Validate Consumption → Review Operations → Calculate WIP → Reconcile Inventory → Review Accounting → Approve Closing

The exact process depends on the company's accounting methodology.

Odoo's accounting documentation also provides inventory valuation and closing processes to reconcile inventory values with accounting records.

9. Reconcile Operations and Finance

WIP should not be owned only by Finance.

Production needs to validate the physical reality.

Finance needs to validate the financial treatment.

A useful responsibility model is:

This creates shared accountability.

10. Monitor WIP Exceptions

The most valuable WIP controls often focus on exceptions.

Look for:

• Manufacturing orders open for too long
• Material consumed but production not started
• Large cost variances
• Unexpected scrap
• Missing labor time
• Incorrect Bills of Materials
• Negative inventory
• Unusual production costs
• Finished goods not transferred correctly
• WIP balances that do not reconcile

These exceptions can identify operational problems before they become financial problems.

11. Build a WIP Management Dashboard

Management should not have to manually combine production spreadsheets and accounting reports.

Useful WIP indicators include:

Production

• Open manufacturing orders
• Aging of open orders
• Production completion
• Delayed operations

Cost

• Material cost
• Labor cost
• Work-center cost
• Actual vs expected cost
• Cost variance

Inventory

• Raw-material value
• WIP value
• Finished-goods value
• Inventory movements

Finance

• WIP balance
• WIP movement
• Production variance
• Inventory valuation variance
• Month-end reconciliation status

The goal is to connect operational indicators with financial consequences.

12. Test WIP Before Go-Live

WIP should be tested using realistic production scenarios.

Test:

Normal Production

Components → Manufacturing → Finished Goods

Partial Production

Components → Partial Operations → Open MO → Period Close

Delayed Production

Material Consumed → Production Delayed → WIP Review

Scrap

Material Consumption → Scrap → Cost Impact

Rework

Production → Quality Issue → Additional Operation → Completion

Cost Variance

Expected Cost → Actual Cost → Variance → Financial Review

Testing should involve both manufacturing and finance users.

The Odoo WIP Implementation Roadmap

A practical implementation can follow:

Common WIP Implementation Mistakes

Treating WIP as a Finance-Only Process

WIP starts with physical production activity, so operations must participate.

Ignoring Costing Methodology

Different costing methods can produce different valuation outcomes.

Using Manual Spreadsheets as the Primary WIP Source

Spreadsheets may create reconciliation problems when production changes frequently.

Ignoring Open Manufacturing Orders

Old or incomplete manufacturing orders can distort WIP reporting.

Poor Material Consumption

Incorrect component consumption creates unreliable production costs.

Forgetting Labor and Work-Center Costs

Where these costs are part of the organization's costing policy, excluding them can understate production cost.

Testing Only Completed Manufacturing

Partial, delayed, scrapped and reworked production must also be tested.

Odoo WIP Go-Live Checklist

Before implementing the process, confirm that your organization has:

• Defined what WIP means for the business

• Documented the production lifecycle

• Validated Bills of Materials

• Defined material-consumption rules

• Defined labor and work-center costing

• Selected appropriate costing methods

• Configured inventory valuation

• Defined production and valuation accounts

• Established month-end WIP procedures

• Defined operational and finance responsibilities

• Tested partial production

• Tested scrap and rework

• Tested cost variances

• Reconciled production with financial values

• Established WIP KPIs

Frequently Asked Question

1. What is a quotation approval workflow in Odoo?

A quotation approval workflow defines when a sales quotation requires review before it can proceed. It can help businesses control discounts, margins, pricing exceptions and commercial risks.

2. Why are quotation approvals important in Odoo?

Quotation approvals help prevent unauthorized discounts, low-margin deals and pricing exceptions from reaching customers without proper review. They also create clearer accountability between sales, management and finance.

3. Can Odoo track margins on quotations?

Yes, Odoo can display sales margins and margin percentages on quotations and sales orders when the margin feature is configured. This helps sales teams and managers evaluate profitability before confirming a deal.

4. Can businesses control discounts in Odoo quotations?

Yes, Odoo supports discounts on quotation lines and provides pricelist rules for structured pricing. Businesses can use these capabilities as part of a broader approval policy for discount-sensitive deals.

5. When should a quotation require management approval?

Approval can be triggered when a quotation exceeds a defined discount, falls below a target margin, exceeds a value threshold, or includes unusual commercial terms. The exact rules should reflect the company's pricing and risk policies.

6. How can margin thresholds improve quotation control?

Margin thresholds help identify quotations that may generate insufficient profitability before they are confirmed. Managers can review exceptions and decide whether the commercial value justifies accepting a lower margin.

7. Should every quotation require approval in Odoo?

No, requiring approval for every quotation can slow down sales unnecessarily. A better approach is to allow routine quotations to proceed while routing higher-risk or exception-based quotations for review.

8. How can quotation approvals reduce commercial risk?

Approval rules can prevent unauthorized pricing decisions and create a documented review process for exceptions. This helps businesses balance sales flexibility with profitability and governance.

Conclusion

Work in progress sits directly between manufacturing activity and financial reporting.

Production sees unfinished goods moving through operations.

Finance sees costs and inventory value that must be correctly represented.

Odoo can provide the foundation for connecting these perspectives through manufacturing, inventory valuation, costing and accounting workflows. Odoo 19 documentation specifically explains how production movements affect inventory valuation and how accounting valuation can be reconciled with inventory values.

The most important implementation decision is therefore not simply:

“How do we calculate WIP?”

It is:

“How should production activity, costs, inventory movements and financial reporting remain aligned throughout the manufacturing lifecycle?”

When that connection is designed correctly, businesses gain better production visibility, stronger inventory control, more reliable financial reporting and a clearer understanding of the capital tied up in unfinished production.