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You know that no matter what the accounting gurus tell you that a sale does not take place until the payment for your product or service is safely in your bank account. That is why it is SO impo

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

rtant that you develop, implement and maintain an effective accounts receivable collection process.Accounts receivable represent sales that have not yet been collected as cash. You sell your prod

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

Examples of combination products may in

ucts or services without collecting cash, instead relying upon your customers' promise to pay within the time parameters that you have set up. In other words, you are extending credit to your cu

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

stomer. If you normally make sales on credit, then your accounts receivable and the proper management of those receivables becomes crucial to your cash flow.

If you have planned well and if you

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

r customers pay on time, then you will have few problems. However, the likelihood that you will have one or more customers who do not pay on time is very high. It is in these cases where your c

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

Combination pro

ash flow can be crimped leaving you short of cash when it comes time to pay your own bills.

This is a common occurrence in many small businesses, but can be avoided with the proper planning and

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

execution of a well thought out process or system. In addition, accounts receivable are also considered an investment, meaning that any cash belonging to the business that is carried in account

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

s receivable is not available for immediate use. This can cause problems with your accounts payable, monthly bills, loan payments, etc. if you lack proper control. There may even be a discount

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

for accounts paid early. Of course, this needs to be factored into your pricing policy.

The reason why any business would make such an investment is the belief that carrying your customers on c

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

redit will create enough additional sales to offset any expenses or losses associated with collecting from the few customers that will be slow or not pay at all.

There are many different account

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

ing tools that you can use to determine how your current system is performing, but these are probably your most important:

1) Average collection period-This is the average time it takes be

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

Following aspects would a

tween the sale of your product or service and the collection of your payment on credit sales only. If your average is at or above the terms of payment, then you need to examine and change either

dd to the challenges in developing combination products:

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

your terms or your collection procedures.

2) Accounts Receivable to Sales Ratio-If this percentage exceeds the ratio of credit sales to sales, then you have a problem and should examine y

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

our procedures.

3) Accounts Receivable Aging Schedule-This is a vital piece of information as it allows you to track on a continual basis both the individual customers who are delinquent,

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

and the total number and dollar amount of past dues. Many small businesses are shocked when they take a look at this for the first time. Remember that these are simply analysis tools to let you

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

know how well your process is working or not working. If you don't currently have a system or a process for collecting your receivables, or if your system is not performing as well as you would

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

Professional from academic institutions, pharmaceutical industries, health care indust

like, you are most likely struggling with your cash flow. While the gurus love profit, cash flow is still king!

Do you currently have a system in place? Do you have a member of your team desig

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

nated to handle this task? (This certainly does not mean that this must be his/her sole responsibility, only that it be one of his/her responsibilities) Do you have a schedule for each contact?

.

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

Do you have phone scripts? Letter templates? Are you employing the three F's?

These are all vital parts of any accounts receivable collection process. You can have all but one and your resu

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

Companies that provide selfless information through particip

lts will suffer. You need them all and you need to do them in proper succession. Make certain that you have all of the above and you will soon see a DRAMATIC increase in your collection results

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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