Cash Management Strategies for Life Sciences Companies 

Cash drives every strategic decision in the life sciences and medical device field. Whether investing in research and development spending, advancing a therapy through clinical trials, acquiring lab equipment, or managing global vendor relationships, liquidity determines pace and flexibility. 

Timelines can be long. Outcomes can hinge on regulatory approvals, trial results, or market conditions beyond a company’s control. Against this backdrop, careful management of cash—how it is tracked, forecasted, and deployed—is critical. It supports continuity between funding rounds, protects against shortfalls, and offers room to act when opportunities or challenges arise. 

Yet managing cash is often more complex than it seems. The timing of inflows and outflows can shift quickly, and operational visibility may lag behind reality. Without disciplined systems and forward-looking oversight, even well-funded companies may find themselves overextended. 

Where Timing Breaks Strategy 

Many life sciences companies appear well-capitalized on paper yet still face operational cash shortages. This disconnect often stems from a mismatch in timing: delayed investor funding or grant reimbursements, payments due before external funds are received, or slower-than-expected customer payments in post-revenue companies.

Structural inefficiencies often cloud liquidity visibility. When banking activity, ERP systems, receivables, and disbursements aren’t fully integrated, cash flow insights become fragmented. Add to that the use of separate technology platforms for cash receipts, payables, payroll, and CRM data, making it difficult to get a real-time, accurate view of cash. Delayed accounting reconciliations or inconsistent transaction coding only compound the issue, leaving a distorted picture of available liquidity at critical decision points. 

Strong internal controls and accurate accounting is essential. Effective cash management in life sciences demands real-time visibility, tight coordination, and disciplined forecasting. The stakes are high: a delay in clinical trial spend can push critical milestones, while underestimating burn rate may impact the timing or valuation of the next funding round. 

Best Practices for Managing Cash in Life Sciences 

Reconcile regularly and build internal guardrails. 

Cash reconciliations should occur monthly at a minimum and more often for high-volume accounts. Strong internal controls—especially around approvals, vendor setup, and disbursements—protect assets and help mitigate fraud risks. 

Code transactions in near real time. 

Frequent coding and the use of a continuous close process supports timely forecasting. For companies processing complex or high-volume transactions, a bi-weekly cadence keeps reporting accurate and decision-ready. 

Stay close to receivables. 

Monitor collection timelines, especially for grant-funded activity or contracted R&D. If possible, collect partial payments or milestones upfront to help fund the work. Understand past payment behavior to refine future assumptions. 

Budget thoughtfully and revisit often. 

Budgets should reflect projected spend across functional areas—R&D, regulatory, operations, commercial—and account for timing of capital expenditures. Comparing actuals to budget regularly allows course corrections before risks compound. 

Forecast cash on a 13-week rolling basis. 

A 13-week forecast offers an actionable window for near-term decision making. Update it weekly to reflect known disbursements, anticipated inflows, and shifting variables. Extend the view when anticipating new capital raises or major investments. 

Scrutinize variable spend. 

Fixed costs such as rent and insurance are predictable. Variable costs—consulting, clinical vendors, software—should be evaluated in context. During periods of uncertainty, distinguish between essential and deferrable. 

Ensure ERP and banking systems communicate clearly. 

System integration is critical to accuracy. Confirm that bank feeds, AP software, and other financial systems sync properly and are monitored routinely. 

Automate where possible, but don’t remove oversight. 

Automation improves efficiency and reduces human error, but oversight remains necessary. Assign responsibility for reviewing, monitoring, and escalating issues when variances appear. 

Cross-check cash disbursements against vendor balances. 

Comparing payments to outstanding liabilities prevents overpayments and flags reconciliation gaps early. 

The path from discovery to market is long. Financial stability allows companies to maintain momentum, meet regulatory obligations, and deliver value to investors without interruption. Good science requires good financial infrastructure. 

How We Help 

AAFCPAs’ Outsourced Accounting & Fractional CFO practice supports life sciences companies with proactive, scalable financial solutions tailored to complex, fast-evolving environments. Whether you are pre-revenue, expanding through clinical phases, or preparing for commercialization, our team delivers the financial clarity and continuity needed to keep pace with science and strategy. We integrate seamlessly with internal teams and help strengthen your finance function from day one—handling the foundational work, managing cash flow, and providing forward-looking guidance to support funding readiness and decision making. 

Our model is built to adapt as your organization grows. You gain access to a dedicated team of accountants, controllers, and fractional CFOs who bring experience across capital planning, R&D cost tracking, grant reporting, and audit preparation. We apply advanced technology to streamline reporting and improve visibility, while reinforcing internal controls and building resilience. Our proactive support helps you anticipate cash needs, navigate operational complexity, and allocate capital with confidence, allowing you to stay lean while advancing your mission. 

These insights were contributed by Destiny J. Flood, CPA, Partner, Commercial Outsourced Accounting & Fractional CFO and Ashleigh Marks, CPA, Consulting CFO.

Have questions? Reach out to our authors directly or your AAFCPAs partner to continue the conversation.

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