Early-stage biotechs often rely on grants to fund research and development. As difficult and time-consuming as it is to find suitable funders and develop compelling grant proposals, securing grant funding is just the beginning. Once you’re awarded a grant, you face the daunting task of tracking your grant expenses accurately and keeping the funds flowing.
Given that biotechs tend to operate with lean back-office staffs, proper grant tracking can prove an overwhelming task. To ease that burden, the Scrubbed Biotech team has compiled 7 steps you can take to improve your grant tracking and cash flow.
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1. Be thoughtful in developing the grant budget.
How you craft the budget in a grant proposal can impact how easy (or difficult) it is to track your expenses later, in alignment with the budget. For example, if your budget itemizes expenditures in a way that your accounting system doesn’t allow you to track easily, you’ll end up doing time-consuming, error-prone manual work when it’s time to report on your grant spending.
2. Keep your documentation organized.
Your biotech company must be able to demonstrate that you’re staying within the grant budget and substantiate that the expenses you record against the grant are bona fide program expenditures. That demands good recordkeeping policies and procedures.
One of the most important recordkeeping procedures is to keep all supporting documents associated with your grant expenses—such as invoices for lab supplies and materials, research consulting services, or other professional fees—properly stored within your accounting software. Get your staff into the habit of adding the invoice to your accounting system as soon as the expense is incurred, to avoid problems like losing invoices and having to request another copy as proof of a valid expense. Without the proper documentation, you could face delays in drawing down funds as you need them, putting your cash flow (and your operations) at risk.
3. Ensure your staff tracks their time as they go.
Grant funders require every employee who works on the funded program to track their time against it accurately—whether they’re directly engaged in research or involved in other functions—to understand how much of your payroll is being allocated to their program. If you have team members working on multiple grants, it becomes more challenging for them to track their time against each task and program correctly.
For the most accurate records, you should require your team to track their hours in real-time, using automated systems that make it easy to comply with this requirement. If employees try to recreate their time records later, the information is likely to be less accurate.
4. Position yourself for timely drawdowns.
Each grant will specify how often your biotech can draw funds against the grant amount you’ve been awarded. Whether it’s quarterly or more frequently, you want to ensure you can draw down funds when you’re eligible to, so you can maintain the cash flow needed to keep operating smoothly. If you don’t keep complete and accurate expense records or if you miss key reporting deadlines, you could put your next tranche of funds in jeopardy.
Robust policies and procedures ensure you can draw down the funds you need according to the grant contract, maintaining your cash flow. Strict policies on timesheet completion, expense tracking and allocation, and budget tracking all put you in the best position to make drawdowns on a timely basis. Likewise, tracking all grant-related deadlines in a central location greatly reduces the risk you’ll miss a key date that could put your next drawdown at risk.
5. Keep your systems and procedures simple.
Your funder needs evidence that you’re using their funds in accordance with the grant. And you want the peace of mind that comes from knowing you’re meeting their requirements and can draw down funds when you need them. You can accomplish both goals with tracking systems and procedures that are simple and streamlined.
A cloud-based accounting system is easily configured to track grant-related expenses and meet your funder’s reporting requirements. Compared to the time-consuming, error-prone process of tracking time and expenses manually on spreadsheets, a properly configured automated system streamlines your team’s work and ensures it doesn’t become burdensome to comply with grant requirements.
6. Improve your odds of receiving future grants.
Many biotechs find that the best sources for future grants are the funders already providing the business with capital. To position yourself to secure more grants from your current funders, you need to give them confidence in your ability to deliver timely, correct, complete information.
One of the best ways to improve their peace of mind is to ensure they can count on the accuracy of your records and reports. Teaming up with an outsourced accounting and finance provider like Scrubbed can help, since our processes included regular quality control checks of the financial statements we develop on your behalf.
7. Keep your other financials in order, too.
While it’s important to satisfy your grant reporting requirements, it’s equally critical to keep all your financials in good order. Even without grant funding, if your biotech is backed by private equity or venture capital then you’ll need to provide accurate, complete, and timely financials, such as an income statement, balance sheet, and cash flow statement. And even if you’re not contractually obligated to provide those statements to an investor, they’re critical to running a sound, successful business.
How Scrubbed Helps Biotechs with Grants (and More!)
The Scrubbed Biotech team understands the nuances and requirements of companies in this industry, especially when it comes to grant tracking and drawdowns. We recognize that you may be years away from generating revenue and that your back-office staff is likely to be lean and stretched—which is why you need to work as efficiently as possible.
Scrubbed partners with biotech companies dedicated to bringing new pharmaceuticals, medical equipment, cell-based products, and other innovative solutions to market. We have the industry-specific knowledge and experience to handle all your accounting and finance functions, simplify your reporting, and help you comply with the requirements of grant funders or investors.
Contact Scrubbed to learn more about our biotech experience and how we can help you track grants, manage cash flow, meet grant reporting requirements, and deliver timely financials.