A significant problem with many grant bids is planning for success. Grant bid assessors like myself find two problems. Firstly, bids focus on the specific R&D project, rather than seeing the project in the context of the development of a business. Secondly, the grant is for the project, not the general funding of the business, so the company’s systems must be able to report the appropriate use of grant monies. A further twist on this issue is that collaborative projects must be able to track appropriate spending in all the partners involved, despite independent accounting systems.
Grant funding bodies, of course want to see successful projects. Many bidders interpret this as needing to demonstrate a clear path in their R&D from a. to b. This interpretation is necessary, but not sufficient. The grant funders are equally keen to see the project, the technology, as a stepping stone towards an important commercial development for the bidder and a change that will have a significant impact on the market.
Bids need to be very clear on where the project proposed fits into the wider strategy of the company. Typically bids need to model the role of the technology in the business’s wider technology portfolio, showing what it improves or enables. The model needs to link the technology to market demand and demonstrate the jobs created within the business along the financial benefits over a three to five year period.
The first message is that R&D grants are awarded for impact, not just the demonstration of competence in delivering a research project. Grant bidders must have a clear vision of commercial success, which is articulated well within the bid documents, to convince assessors of the obvious legacy the work will deliver. Bidders are well advised to study the impacts the grant programme they are bidding to seeks to achieve. In a sense a grant helps your business, but the Faustian pact is that you also deliver the agenda of the grant awarding body.
The second aspect of planning for success relates to the award of the grant. The grant is awarded for specific activities and under specific terms. A grant may cover research activities, but not manufacturing. User testing may be funded, but not market research. Research activities may attract 70% funding, while demonstration activities only receive a 30% contribution. The important point is, can your accounting system distinguish all these streams of activity clearly? It is surprising during project audits how many SMEs are not set up for clear unequivocal project accounting. Often one of the hottest points of contention are the allocations of staff time. So, planning for success also means ensuring that internal company systems and particularly accounting systems are appropriate at the outset.
Many grants are paid in tranches. A successful bidder may receive some funds up front, but after that subsequent payments are in arrears and often the final payment is delayed until the submission and approval of a final report. The impact for SMEs, on their cash flow, can be significant. Returning to my previous point, if the audit process identifies problems with reporting of the allocation of funds payments will be further delayed with serious cash flow implications for a cash strapped SME.
Any SME seeking grant funding should ensure that they have a clear project based accounting system in place before contemplating applying for grant funding. Cash flow and audits by grant awarding bodies should be viewed seriously as soon as a bid is contemplated to anticipate problems and ensure that mitigation is in place.