5 Reasons Clinical-Stage Biotechs Need Simplified Accrual Management

Clinical-stage biotech companies must be able to design and execute flawless clinical trials while also adhering to regulatory guidelines and accurately managing accounting accruals. The accruals provide financial transparency to internal and external stakeholders that want to understand the financial health of the company, so the data must be available, accurate and reliable.  

Unfortunately, spreadsheet-based accrual management is both time consuming and error prone. It may also lead to high error rates, limit control, and result in financial misstatements. And because the spreadsheets are disconnected from all other business systems, they can’t scale as new clinical trials are added. 

These core challenges highlight the need for unified, industry-built business solutions as biotechs transition to clinical trial stage. Here are five reasons why more clinical-stage biotechs are trading in their spreadsheets for full clinical trial accounting systems: 

1. Provides a high level of control and confidence: The biotech firm that’s managing clinical trials may trust that a contract research organization (CRO) is spending the amount of money it says it is to develop clinical trials. For accounting and audit purposes, the biotech firm needs its own independent understanding of those expenses — a step that is most often handled on spreadsheets. By integrating accrual accounting with NetSuite, the same biotech can tap into new insights about how its clinical trial is doing, including all budgeting, planning, and other factors. 
2. Rescues biotechs that are drowning in a sea of data: Clinical trials generate a lot of data. In addition to the trial information itself, there are invoices, payments, stipends and other financial data. When this data is captured and shared via spreadsheets, it creates data silos that inhibit holistic visibility, introduces data quality concerns, and doesn’t allow for the extraction of meaningful insights. By bundling NetSuite with Condor, BDO Digital helps biotechs save time and money, reduce risk, and prepare for commercialization — no spreadsheets required. 
3. Sets biotechs up for AI success: The inevitable use of artificial intelligence in both business management and accounting processes is another driver of clinical-stage biotech systems that want to move away from using spreadsheets as quickly as possible. With the right system in place, companies can get ready for the next level of AI in financials versus worrying about all the data being locked up in Excel spreadsheets.   
4. Helps auditors feel comfortable with the numbers: All clinical-stage biotech companies wonder whether their auditors will sign off on the approach they’re using or if they’re going to get a surprise bill at the end of the audit. Having an automated system for processing accurate and complete accruals is critical for companies that want their auditors to feel comfortable with the process behind those calculations.
5. Gets everyone working from the same accrual playbook: Take a peek at the typical biotech’s form 10-K and you’ll likely see R&D expenses, clinical expenses, and clinical accruals, with most of the related accruals being calculated differently. This can pose a problem for the firm that’s raising a substantial amount of capital or going public and needs a system they can trust and rely on. By leveraging software that automates the calculation of accruals, companies can rest easier knowing that their expenses are being booked in an audit-friendly manner.  

Once they have a full clinical trial management system in place, biotechs can confidently put their best foot forward on every audit, share only reliable data with stakeholders, and help their CFOs sleep a little better at night. Rather than storing clinical trial data on multiple, complex spreadsheets, firms can let their software solutions do the heavy lifting and focus instead on developing even more life-saving therapies.