Sites must track, manage and collect accounts receivables
I have been an investigator for clinical studies for over 30 years and, of course, many practices have changed over the years.
Gone are the days when the check literally was in the mail for work performed, in many cases with or without an invoice to generate payment. But sites that continue to operate with that mentality surely will fail financially in today’s environment.
I speak as the voice of experience in this matter, as my own sites still struggle to consistently manage the entry of information required to invoice in a timely, accurate and complete manner. The process requires coordinator responsibilities for per-study entry of procedures, visits, etc., into our CTMS system, as well as—in some cases—data entry personnel, management follow-up and financial staff to generate the actual invoice and manage collections, tracking and follow-up. The multiple steps involved increase commensurate with the complexity and number of studies one is performing. This complexity has required us to step up our CTMS platform to a level of process not dissimilar to what a CRO must manage to handle multiple site payments.
It appears we are not alone in our struggles. While sites report cash flow as one of their most fundamental challenges in keeping their sites sustainable, many sites’ lack of following basic good accounting and business principles only adds to the dilemma. The reality is that an average of 13% of an entire study budget is withheld until study completion, according to the 2013 Site Solutions Summit Survey. Additionally, CFS Clinical says 26% of all payments it processes are inviolable items and not driven by electronic data capture. Lastly, on average five line items can be invoiced per clinical trial agreement, accounting for on average $1,168 per study, according to CFS Clinical. Then, the basic study visits need to be accounted for. Sites must take charge of their accounts receivables by tracking in detail what is due, invoicing and reconciling all studies after receipt of the final payment.
Tracking accounts receivable can be a daunting task for any site, as protocols and contracts have grown increasingly cumbersome to manage. However, sites must gain a greater understanding of these details and track them religiously, on a spreadsheet, CTMS or accounting software. Once there is a commitment to this basic business practice, there will be much greater clarity in not only where the revenue is coming from, but also who owes the site money and how much.
It also is critical for sites not only to keep track of these various fiscal elements, but also to collect them. Unfortunately, sites say their commitment to invoicing is not that strong: 19% of sites report always sending invoices, 25% often, 22% sometimes, 23% rarely and 11% never, according to the 2012 Site Solutions Summit Survey. Sites report often being told not to send invoices, as it is not a process the sponsor or CRO can manage and the sites will be “wasting their time.” This type of response is neither appropriate nor logical. As stated in a blog on AccountingWeb.com, “Invoicing customers is a critical function of most organizations, and good invoicing practices result in better collections of receivables. Organizations that fail to invoice in an efficient manner are missing an opportunity to improve cash flows and increase collection rates.”
It is ironic to note that our own practices contribute significantly to nonpayment or lack of on-time payment, since many sites rank timely payment as one of the top five areas of importance in maintaining the integrity of their businesses. Dr. Clare Sears of DrugDev found 78% of global investigators surveyed ranked payments within 30 days to be a valuable or extremely valuable support activity.
While we are tied to many factors in our payment timelines—such as monitoring activity and data entry—it is crucial to work hard to hold up our end of the bargain at the site level, and to track and manage our invoicing. However complex the process may become based on your scope of work, this is the foundation required to run our businesses as well as any other. It is imperative that we continue to strive to adapt business practices to reduce our labor burden, increase efficiency and manage costs.
Jeffrey Adelglass, M.D., F.A.C.S. is founder, owner and president of Research Across America (RAA), a U.S.-based, privately owned, multi-site, multi-discipline clinical research organization. RAA owns multiple research sites across the U.S. and has performed over 1,800 clinical trials in multiple disease areas.
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