Best Practices for Accounting and Auditing
Sites that think they are too small, too busy or too inexperienced to monitor their billing and collections may be losing money they could easily recoup with some basic accounting procedures.
With a few basic tools and off-the-shelf accounting software, like Excel or QuickBooks, even the smallest site can learn to better track its invoices and improve collections.
Sites need to implement a reliable process for tracking invoices and payments, as well as an auditing program that includes at least one financial audit of each study a site participates in, according to David Russell, director of site strategy for WCG PFS Clinical.
Russell suggests clinical trial sites institute some basic practices that can help them track invoices and payments.
The first of those practices is to set up a “research-only” lockbox for all payments from CROs and sponsors. This is something a site can generally set up through its bank, where copies of all checks from a CRO or sponsor are put into the lockbox, and the site receives a daily report — generally by email — showing what came in. The funds are still deposited directly into the site’s account, but the lockbox helps the site keep track of money coming in while also creating a record that can be reviewed later.
Russell says that maintaining a lockbox system can give smaller sites quicker access to funds coming in. For larger sites, it helps to minimize the commingling of funds. If a lockbox is not an option, sites might consider a separate address for checks or at least instruct sponsors and CROs to send checks to a particular staff member’s attention.
The second practice to immediately put into place is a disciplined process for reconciling receivables. Make sure one person is dedicated to this task and that they’re looking at it on a daily, weekly or at least monthly basis. That person should make sure to flag any issues and to track where problems occur and then send that information upward through the organization, Russell says.
Study sites should also periodically audit their accounts receivables management. That can be a fairly basic audit, Russell says, looking at the reasons for any outstanding payments. Is it a problem with your collections process? Is it because you’re leaning heavily on a particular sponsor or CRO that seems to be having issues with on-time payment? “It’s important to stay on top of your receivables and to just understand what’s happening there” so you can work to mitigate any issues, he says.
Russell suggests that a reconciliation report be created for every study a trial site participates in. That report is just basic bookkeeping, done in Excel or a similar program, which shows everything that should be invoiced and when it was invoiced and then keeping track of when payment comes in. The report should include invoiceable items but also visit activity, he says.
This report will help the site track its invoices and receivables, and it will be an important starting point for auditing. By tracking the dates of invoices and payments, you can begin to see what factors contribute to late or missing payments. You can also compare these reports from study to study and over time. That can provide useful information about the sponsors and CROs you work with but can also provide an accounts receivables benchmark that you can monitor as you implement more robust tracking and auditing methods.
Russell also advises sites to always request a payment detail when a sponsor or CRO doesn’t provide it. It may seem obvious, he says, but it’s not uncommon to get checks with no such detail so that the site is left trying to figure out what the check is paying for and how to apply the funds.
Sites should put a clause in the clinical trial agreement (CTA) that stipulates proper details will be sent with every check. But, of course, that doesn’t always work.
“What we see from a lot of sites and definitely don’t recommend is that they’ll just apply the money to the study itself or maybe just generically to accounts receivables,” Russell says. But that is a bad habit that only makes things harder to track later. It’s important to be specific in your bookkeeping about what the money is for, because without that detail it will be difficult to perform a reconciliation report later. It will also become more difficult to track down payments you think are missing.
In some cases, site staff could look through their invoice records and figure out what the check is for, based on the timing and the dollar amount. But Russell recommends that the site still ask the sponsor for that detail, to remind them that it’s needed and to reinforce the habit of it being provided.
When payments come in, they should be posted to the specific item or patient visit on the patient log. That way, when a payment is missing, the site can follow up with the sponsor or CRO in a timely manner. Without that level of detail, it can be difficult to identify missing or incorrect payments.
“For instance, we see a lot of times a patient will get paid for visit one, two, three and four, and then you get a payment for visit six and seven,” Russell says. “You have to go back to the sponsor and say, ‘What about visit five? What happened there?’”
After discussing a discrepancy, be sure to create a discrepancy report that can be shared with the sponsor or CRO. It should include information about who is responsible for the payment. Once that payment is received, the report can be updated.
It’s crucial that sites regularly review their collections, looking for outstanding invoices as well as any patterns of nonpayment or payment problems. Make sure there is a written, detailed process for how collections should be pursued.
Whoever is responsible for collections should have regular meetings with key leaders at the site to keep them in the loop. These could take place monthly or even biweekly, depending on the number of studies at a given site and how many issues have been identified in the past.
Beyond individual payment issues, these collections reviews can also help to track difficult sponsors or CROs. The information you collect can be useful in the future. If a sponsor that’s been difficult in the past comes back to your site, you can raise these past issues with them. “Just be transparent,” Russell suggests. “You can say, ‘Ok, yes, we can do this, but we’ve had some issues with you in the past regarding payments. Here’s some examples.’” A site could then ask to put additional detail in the CTA to spell out payment policies and timeframes, for instance. And in extreme cases, a site could simply choose not to work with a particular sponsor or CRO again.
Excerpted from Billing Sponsors for Site Expenses: How to Budget, Handle and Track Payments. For more information, click hereL https://bit.ly/2F5y4ZW.