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Cash is King…That is what everyone tells us and it is true! You cannot function successfully in any business without proper cash flow. So if this Cash Principle is so well known, then why is it that so many businesses struggle? Sometimes the obvious is not always so

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

obvious when you are entrenched in running the day-to-day aspects of your business. Here are 7 Tips to Improve Your Cash Flow!

1. Cash and Carry. Operate a cash and carry type business versus worrying about receivables. The best business plan is one where customers

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

pay at the time of purchase so you don’t have to worry about invoicing or collection procedures. Invoicing and collections take up valuable time, so you want to come up with creative ways to incentivize payment immediately. Set the ground rules in the beginning so yo

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

ur clients know what you expect.

2. Receivables Collection. Collect your receivables in a prompt manner. Don’t let them hang out there forever until your customers decide they want to pay you. Being a good steward of your business is “good business”, so have a proce

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

s in place for invoicing and collections. The longer your receivables are outstanding, the less likely you are to collect. You don’t have to be mean and rough to collect promptly from your clients. A good rule of thumb is that you should always have a due date on the

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

invoice and then send out a follow-up statement within 10 to 30 days from the due date. Each industry and business environment has different insights as to what is the “ideal” time. I would not send follow-up correspondence any sooner than 10 days past due. Payment

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

may just be delayed by the mail; however, waiting longer than 30 days is too long. If you have not received payment within 45 to 60 days of the due date, then a phone call should be made to follow-up with your customer. Accounts that go past due 90 or more days shoul

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

d be taken to the next level of collections with an outside agency, internal collection “ninja” or any other mode you have established for collections. Find what works best for your business and stick to it. Each day that you are delayed in receiving payment is an ad

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

itional cost of doing business. Time is money.

3. Receivables Funding. Implement an accounts receivable funding program. Factoring of accounts receivable has become very popular and it can be a great way of keeping the cash flowing. Businesses who deal with large bu

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

sinesses or government agencies lend themselves to utilizing factoring programs. If your clientele is made up of small businesses or individuals, you may find it more difficult to establish an accounts receivable funding program. Why? Funding companies are monitoring

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

risk. There is less risk with larger companies or government agencies. Or so they think!

4. Vendors. Negotiate terms with your vendors to help delay the outflow of cash payments. Lots of vendors have payment terms where you can delay the payment until end of the mo

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

nth or maybe even up to 60 days. This allows you a little float time to use their money while you are working on your project. Then hopefully you’ll receive payment from your customers prior to needing to pay for the products you purchased. Some companies also go the

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

route of consignment. Then you are selling someone else’s goods and don’t have your money wrapped up in inventory. This option can help you increase your product offerings without having to invest large amounts of money in inventory.

5. Customer Deposits. Have your

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

customers pay a deposit prior to the start of the job. This will help you cover your upfront costs as you start the projects. It’s very common to have a deposit with the signing of your contract. It decreases the risk associated with nonpayment because you’ve receive

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

d a portion up front. You can also implement periodic payments throughout the contract vs. a single payment upon completion of the project so that cash is flowing in consistently.

6. Revolving Credit Line. Establish a revolving line of credit through a lender to hel

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

p you with potential cash flow crunches. Especially if the amount of savings from prompt pay discounts are greater than the financing charge from the lender or the lender’s financing charge is less than what your vendors might charge for late payments. This helps giv

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

your business a safety net so that you can continue to operate during those times when you are offered great specials if you buy today but may not have extra cash available.

7. Savings Fund. Establish a savings fund to help you operate through slow times. Most busi

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

nesses have swings in their business flow and managing cash effectively can be a challenge. Store away extra during the good times to help alleviate issues during the slow season. I know this sounds easier than it is, but if you take out a percentage each month and t

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

ransfer it to a savings account then it will be “out of sight and out of mind.”

You may find that each of these 7 tips is viable for your business, or maybe only 1 or 2. Anything that you can do to focus on better cash flow will provide benefits to your business. Th

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

e worst thing you can do is sit back and “hope” that things go well. Look around! See those “CLOSED” signs on the surrounding shop windows? They played the “hope” game and lost. What are you going to do? Hope? No…implement a plan for cash flow management starting now

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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