Automating and Simplifying Accrual Management for Clinical Stage Biotech Companies

Using spreadsheets for accrual management may lead to errors and potential financial misstatements. Here’s how Condor, NetSuite, and BDO Digital help clinical-stage biotech companies automate the accrual process, improve financial forecasting, and enhance compliance.

Time is money for biotech companies that reach the crucial clinical stage of new drug development. Under the pressure of designing and executing flawless clinical trials while adhering to regulatory guidelines, these organizations must also accurately manage accounting accruals throughout the process. Accruals provide financial transparency for CFOs, investors, auditors, and other stakeholders who want to gauge the financial health of companies that are in the throes of clinical trial research and development (R&D).

Most organizations calculate and share accruals via spreadsheets, regardless of what other software solutions they work with. Even companies with enterprise resource planning (ERP) platforms in place must go outside of those systems to calculate and track accruals. These traditional methods are error prone and offer limited visibility and control. Spreadsheets are also inefficient, requiring additional work hours as the number of clinical trials expands while remaining disconnected from all other business systems .

“Having accurate and complete accruals is critical for companies that need to make sure auditors are OK with the process being used and how the accruals are being calculated. At the end of the day, all clinical-stage biotech companies are wondering 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.”

- Jennifer Kyle, CPA, CEO and Founder at Condor Software 

Biotech companies must address these and other accounting challenges as they begin clinical trials for new drugs and medications, but doing so requires the right team and tools. By turning NetSuite into a full clinical trial accounting system, Condor Software and BDO Digital help biotechs effectively and efficiently manage and automate all aspects of clinical research study finance.

Drowning in a Sea of Data

Clinical trials generate a tidal wave of data that incorporates trial information plus all the invoices, payments, stipends, and myriad other financials. Most of this data is captured on spreadsheets and then used to generate reports for auditors, investors, regulatory agencies, and other stakeholders. These spreadsheets create data silos that can inhibit holistic visibility, introduce data quality concerns, and obscure the extraction of meaningful insights. This manual, resource-intensive approach often requires hands-on support from manager-level accounting professionals, making the process expensive, error prone, and time consuming. 

Accrual management challenges can also create roadblocks for clinical biotech companies. Expenses from clinical accruals, research and development (R&D), and clinical expenses can quickly become overwhelming and difficult to track, which is where Condor’s software is able to help. 

Condor Throws Clinical Trial Biotechs a Lifeline

Condor is a financial decision-making platform that helps biopharma CFOs understand, control, and strategize their R&D spend. The software automates the calculation of accruals, saving users time while also giving them the peace of mind that their expenses are being booked in an audit-friendly manner. Condor integrates directly with NetSuite to create a full clinical trial accounting system.

“We take the best pharma ERP system in NetSuite and fuse it with the best clinical trial finance system in Condor. With these two systems bundled, biotech companies not only save time and money, but they also reduce risk and know that they’re ready to go once their clinical trials are completed and commercialization starts.” 

- James Neal, BDO Digital Principal

Condor helps companies understand and control their clinical trial expenses. For example, a biotech firm managing clinical trials will often take the development costs listed by a contract research organization (CRO) at face value. For accounting and audit purposes, the biotech must come up with its own independent understanding of those expenses — a step that’s most often handled on spreadsheets. 

Condor eliminates that manual process by automatically calculating the listed expenses. After initial setup, the software takes the applicable invoices and generates accounting entries to show the current state of a clinical trial. By integrating the software’s capabilities with NetSuite, biotech firms can further enhance Condor’s capabilities and unlock new insights about how their clinical trial’s progress, budgeting, and planning. 

Navigating the Audit Gauntlet

Managing the complexities of drug development is just one hurdle that clinical-stage biotech companies must overcome. Financial audits pose another challenge that biotechs need to consider. These audits are designed to ensure transparency, enhance investor confidence, and demonstrate compliance with strict regulations throughout the development of new pharmaceuticals. Condor simplifies financial audits by capturing the necessary documentation while using a system of workbooks and checklists to walk CFOs and accounting managers through the audit process in a logical manner.

Both NetSuite and Condor are SOC 2 compliant, an industry-standard security framework. Unlike spreadsheets that may be riddled with errors, saved on different computers, and disconnected from any other system, Condor is a unified solution that provides a single source of truth for auditors.

The inevitable use of artificial intelligence in both business management and accounting processes highlights another reason clinical-stage biotech systems  should consider shifting  away from spreadsheets. With Condor in place, companies can prepare for the next level of AI in financials instead of worrying about data existing in siloed, disconnected spreadsheets. 

AI is reshaping every aspect of business, and its application within finance can leave organizations uncertain about its impact. As a starting point, businesses should enact strong data governance policies and controls to make the most of what AI has to offer. Doing so can position CFOs to act as more strategic partners or to work in concert with other stakeholders in the business. 

Adding Strategic Value

While having auditable, de-risked clinical financials is the ultimate goal, Condor offers biotechs other benefits as well, such as time savings and cost savings, as well as improved forecasting that goes beyond what traditional financial planning and analysis (FP&A) platforms can provide.

“When a biotech CFO looks at a horizontal FP&A solution, they can see corporate-level forecasts but nothing that tells them what a clinical trial is going to cost over the next one to two years. Condor solves this by also factoring in budgets, change orders, and other variables that can dramatically impact financial forecasts.”

- Jennifer Kyle, CPA, CEO and Founder at Condor Software  

Having Condor and NetSuite in place also helps demonstrate the business’s organizational planning as opposed to storing data on multiple, complicated spreadsheets, that rely on manual entry.

A Deep Understanding of Condor and NetSuite

BDO Digital uses a holistic, industry-centric approach when helping companies gain competitive advantage in their respective industries. With over 100 successful NetSuite implementations in the life sciences field, we possess the deep experience and knowledge needed to facilitate a smooth transition to using NetSuite and Condor. Whether you’re using standard accounting software and are in need of a full ERP suite, or you’re already using NetSuite and grappling with accounting accrual challenges, we can help.