Biotechnology Accounting: How Outsourcing Your Accounting Benefits Your Biotech Company
Biotechnology is a constantly changing and evolving field. What was considered biotechnology in the 1970s is vastly different from what it is today. With so many changes rapidly happening, it can become a challenge to balance your accounting.
One way to fix this problem is to outsource your accounting to a firm that will support you through all these challenges. In the following, we will briefly discuss the biotech industry, the benefits of outsourcing your biotechnology accounting, and the services that a qualified firm can provide your company.
What Is Biotechnology?
Biotechnology utilizes cellular and bimolecular procedures to develop technologies and products that help improve our lives and our planet’s health.
Why Should The Biotech Industry Outsource Its Accounting?
Outsourcing your biotech company’s accounting helps give you an objective perspective on the numbers around your business. Your financial accountant can help you create a business plan to accelerate your business growth. Plus, they can also make sure you’re tracking accounting information correctly, which is crucial if you have plans to attract more investors or be a part of an M&A.
Especially as venture capitalists have changed their strategies. Rather than looking for start-up companies, whose first product could be years in development before it hits the market, they are looking for lower-risk options, like licensing an existing product and then refining it to suit their needs.
Depending on your company’s needs, you might not need a full-time accountant on staff. However, you’ll still need someone to take the accounting pressures off you and your team. A solution is that you could hire a paid professional to help you find the best software for your business and help you set up an efficient accounting process.
What Services Can Outsourced Accounting Provide?
Outsourced accounting is about more than just balancing your books. There are several other ways it can support you beyond accounting for your biotech companies.
Financial reports give you an accurate picture of your business’s financial health. Reporting provides transparency to shareholders so they can see if their investment is safe and if your business is a prudent investment.
Having access to the correct financial data helps you adjust your business tactics. You can see what your spending trends or losses are and be able to pivot accordingly.
Some reports you should be familiar with are cash flow statements, income statements, and balance sheets.
Financial forecasting estimates a company’s future by using its financial past. It can help you determine how to allocate or create budgets by seeing what happened in the last fiscal year. Another benefit is that it can help your management team make adjustments to production and inventory levels.
By using cloud-based accounting software, all of your financial data is located in one spot, making it easy to set up a forecast. It’ll save you time since you won’t have to pull together paper records and hope everything is correct. You’ll also be able to pull in real-time data, so you can ensure that your forecasting is accurate.
Budgeting is the financial direction of where you want to take your company. It represents your financial position, goals, and cash flow. When you start planning for future expenses or growth (i.e. adding more staff, office expansion), a budget is an essential item.
You can also control and keep track of any debt that your company has. Once you know that then you can create a payment schedule and estimate when it will be paid off.
In the agricultural biotechnology field, you might want to develop a plant to grow in a non-native region. You’ll need to budget for any research and development trips to study the plant in its native region, transport the plant or seeds to the new region, or acquire any additional equipment needed for the growth process.
How These Services Benefit Biotechnology Companies
Now knowing what services you get when you outsource your biotech accounting, the next question is how can those industry accounting services benefit you and your company in a real-world setting.
Funding & Grants
Many biotech startups use grants in their early stages to help fund their research and development efforts.
Grant proposals often have a surprisingly detailed financial/accounting component, and many startups are unprepared to state the financial implications of their research on a grant proposal. Plus, after receiving a grant, you need to correctly track your grant expenses so it matches what appears on your grant application.
Poorly tracking your funding could result in grants being given back or not receiving them again.
For example, in the medical biotechnology field, most of the research is subsidized by grants. If your company is developing an antibiotic and you apply for a grant, you’ll need to have your finances in order to be considered.
They will need to see that you can produce what you say you will produce—not take their money and squander it on something else. You’ll also need to detail how you used their money and be able to account for every cent.
Mergers & Acquisitions
In certain instances, you might only develop a product to a point where it attracts the attention of a buyer. They want to purchase your company to get a head start on expanding their market share. Since you already did a large portion of the work, they won’t need to put as much work into your product and be able to put it on the market quicker.
Having your accounting in order can position your company in a stronger bargaining place if someone makes an offer to purchase your company. You can show that your company either is profitable or is forecasted to become profitable. This will make potential buyers feel more comfortable with making an offer.
For example, if you work in industrial biotechnology, your company may specialize in manufacturing textiles from microorganisms and it could attract the interest of a larger company. For them to feel comfortable making an offer, you will need to show that your finances are in order and your technology will be profitable. Using a biotech accounting firm in an advisory capacity can better position you in the merger and acquisition process.
Working With Powered By Centri
Finding the right accounting partner is a challenge. At Powered by Centi, we understand this and are prepared to become a part of your team.
We’re not a remote figure who only knows you as an account number. Part of our philosophy is to offer each client a dedicated contact person who not only knows you but your account history. We collaborate with you and your team to set up your accounting so you can focus on what matters—your business.