How to calculate clinical trial accruals
A clinical trial accrual is an estimate of the cost of trial work performed in a period but not yet invoiced. It is calculated from activity, not invoices: units of work performed (patients enrolled, visits completed, monitoring visits, lab tests) times the contract rate, plus milestone items by percent complete, plus an estimate of pass-through costs, minus amounts already invoiced for that work. The CRO invoice is used to reconcile the estimate, not to create it.
For most clinical-stage biotechs the clinical accrual is the largest accrued liability on the balance sheet and the entry auditors test every quarter.
Why invoice-based accruals are wrong
CROs invoice on their own schedule, often quarterly, and pass-through costs arrive in lumps. In any month, the invoices on hand describe work done one to three months earlier. When a study is ramping, accruals based on invoices understate expense every month, and the catch-up lands in whichever quarter the invoices arrive. When a study is winding down, they overstate it.
The three inputs
| Input | What it tells you | Where it comes from |
|---|---|---|
| CRO budget grid and site budgets | The rate for each unit of work, which lines are milestones, which are pass-throughs | Contracts, change orders, amendments |
| Schedule of assessments (SOA) | Which visits and procedures each patient gets, and when | The protocol (and each amendment) |
| Enrollment and visit actuals | How many patients screened, enrolled and completed each visit | EDC exports, weekly |
The calculation, step by step
- Count units performed this month for each budget line: enrollment × SOA visits for site costs, monitoring visits, data management units, and so on.
- Multiply by the contract rate from the current budget version.
- Accrue milestone lines by percent complete against a documented plan date (for example "database lock, $50,000, 60% complete").
- Estimate pass-throughs from the run rate and flag them for review.
- Subtract amounts already invoiced for the same work. The remainder is the accrual.
- When the invoice arrives, reconcile units billed to units accrued, reverse the estimate, book the actual, and carry any open estimate forward.
Four places the simple method breaks
- Milestone lines are not unit lines. Applying unit logic to "site activation" or "database lock" is the most common modeling error in CRO grids.
- Screen failures cost money but never appear in enrolled counts. They need their own accrual bucket driven by screened patients.
- Amendments create two cohorts. Patients enrolled before a protocol amendment can stay on the old SOA while new patients follow the new one, so one study can have two active schedules.
- Change orders can be retroactive. "Effective August 1, the monitoring rate is X" changes months already closed. Version the budget and true up explicitly rather than recalculating reconciled invoices.
Also watch for discontinued patients (partial SOA consumption), unscheduled visits (need a documented mapping rule), and CRO invoices that batch several studies.
Monthly close checklist
- Pull enrollment and visit actuals from the EDC at month end
- Compute units performed per budget line against the current budget version
- Flag anomalies (10 patients enrolled but 50 monitoring units billed is an operations question, not a journal entry)
- Accrue milestone lines by percent complete, with the plan date written down
- Estimate pass-throughs; review any invoice that differs
- Reconcile invoices received; reverse and true up
- Keep every budget version, amendment and accrual decision for the audit file
Spreadsheet or software?
One study with one CRO runs fine in a disciplined workbook. It becomes a software problem with several studies, CROs and amendments in flight, or when the accrual also has to drive the forecast and cash runway.
Purpose-built options include clinical-finance specialists such as Condor and Auxilius, which focus on the accrual and audit workflow, and whole-company platforms such as Exigyn, which connect the accrual to the OpEx forecast, headcount, three statements and runway. See the biotech FP&A software guide for how they differ.
How Exigyn handles it: CRO budget grids, site budgets, amendments, enrollment exports and CRO invoices are imported into one study model; amendments are stored as versions, never overwritten; accruals are computed from activity with milestone and unit lines treated separately; invoice reconciliation, accrual decisions and journal-entry exports are logged for the auditor; and the same engine projects clinical spend forward into the runway. See it on a sample study →
FAQ
What is the difference between a clinical trial accrual and a prepaid?
An accrual is a liability for work performed but not yet billed. A prepaid is an asset for amounts paid before the work is performed, such as a CRO upfront payment, which is drawn down as work happens.
Should accruals be based on CRO estimates?
CRO-provided estimates are a useful cross-check but are not activity data the sponsor controls. Auditors expect the sponsor to own the estimate and document its basis.
How often should clinical accruals be calculated?
Monthly, at every close, even when no invoice has arrived. Months without an invoice carry an open estimate until the invoice is received.
What is "enrollment" for accrual purposes?
Define it per study. EDCs track consented, screened, randomized and dosed separately; site budgets are usually randomized-forward, and screen failures are accrued separately.
Exigyn ships with a preloaded sample biotech company: runway, clinical accruals, headcount and budget vs. actuals in one model. Free 14-day trial, no credit card.
