Overcoming Financial and Operational Challenges
A VC-backed, seed-stage life sciences company, operating in the UK and US, was looking to build an operating & financial model that reflects the actual functioning and runway of the business. Having previously relied on a fractional CFO and other professional firms for tax and compliance advice, they needed a cohesive financial strategy to manage cash flow, compliance and capital calls effectively.
FD’s Approach
FD’s tailored approach provided a comprehensive solution to streamline compliance processes, integrate financial management and optimise cash flow.
Establishing a Scalable International Structure
With operations in both the US and UK, the company needed an efficient cross-border financial framework. FD helped structure its international operations to support long-term growth.
- Transfer Pricing Optimization: Designed and implemented a tax-efficient inter-company structure, ensuring proper allocation of IP returns, funding and pricing between the US parent and UK subsidiary.
Optimising Tax Strategy & Compliance
FD restructured the company’s tax position to align with its business model and improve compliance across jurisdictions.
- Tax Structuring: Positioned the company as a UK entrepreneurial entity, enabling access to R&D tax credits and optimizing its overall tax strategy.
- Seamless Compliance: Integrated US and UK compliance processes, reducing reliance on external finance professionals and streamlining regulatory obligations.
Strengthening Financial Management & Cash Flow
A strong financial foundation was essential for operational stability and investor confidence. FD provided financial modelling and cash flow strategies to support decision-making.
- Financial Assessment: Identified key gaps in tax compliance (US tax, VAT, R&D, UK tax) and forecasting.
- Scenario Planning: Developed detailed 3-, 6-, 12- and 18-month projections, including daily cash flow modelling, to identify inefficiencies in order processing and payments.
- Cash Flow Optimization: Enhanced financial credibility by mapping cash needs across multiple scenarios, ensuring sufficient runway for drug development.
- Data-Driven Decision-Making: Integrated financial data into strategic planning, enabling management to make informed, forward-looking decisions.
Enhancing Operational Efficiency & Investor Readiness
To support its growth, the company required a cost-effective finance function and a strong reporting framework for investors.
- Outsourced Finance Team: Provided financial management and reporting for a fixed monthly fee, improving efficiency and strengthening spending controls.
- Capital Raise Support: Developed financial projections and scenario analyses to support venture capital reporting, contributing to a successful £5.5m fundraising round in Q4 2024.
Maximising R&D Tax Credits
- Restructured for Higher Claims: FD’s tax strategy resulted in an additional £280K in R&D claims in 2021 – a huge increase from the £60K secured by the company’s previous advisor in 2020.
- Ongoing Tax Benefits: Filed tax claims in 2022 and 2023, each yielding over £1m in R&D tax credits.
The Outcome: Comprehensive Solutions for Financial Stability
By addressing key financial and operational challenges, we positioned the company for long-term success and stability. Our approach ensured the company could confidently move forward with its growth and future fundraising efforts.
- Risk Mitigation:Identified and addressed key financial risks, enhancing the company’s credibility with investors.
- Operational Alignment:Streamlined financial and operational processes, enabling the company to focus on its core business activities.
- Furthering Financial Runway through R&D Credits: Helped the company secure a total of over £2.5 million in tax credits from 2020 to 2023, significantly extending their financial runway.
- Cost Efficiency:Delivered a sensible, logical approach that kept costs reasonable for a cash-burning enterprise.
Next Steps
If your business is navigating complex financial and tax challenges, our team can help. Contact us today to explore tailored solutions that drive financial stability and growth.
Contributors
Sonny Bangar, Head of UK Advisory
Jay Menon, Tax Partner
Jonathan Clark, Tax Partner
Thomas Wells, Director of Commercial Growth
Bo Harmon, Advisory Director