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Use RoyaltyZone to monitor and avoid the most common royalty reporting errors and under payment issues.
1. Was the royalty report submitted on time?
Red Flags:
1. Licensees that consistently report royalties late may have insufficient staff or internal controls in place to effectively manage royalty accounting.
2. Has there been a change in the royalty reporting staff?
2. Are the licensee's trends for royalties, net sales, and quantity sold meeting expectations?
The "Report Trends" chart displays royalty results for the most recent reporting period (first column), the previous reporting period (2nd column), the same period in the previous year (3rd column), and the average for all licensees that have approved reports for the current period (4th column)
Red Flags:
1. Do royalty results meet with expectations?
2. Is there a sudden decrease in royalties owed?
3. Do royalty results mesh with recent press releases and news stories? (TIP: use Google Alerts to monitor licensee news)
4. How do sales of licensed products compare to sales of the licensee's non-licensed products?
Use the drop down menu to view and analyze the Net Sales results.
Use the drop down menu to view and analyze the Quantity Sold results.
3. How does the licensee performance compare to your other licensees?
The last column on the trends charts displays the average for all licensees that have approved royalty reports in the current reporting period. These values update in real time, as each newly submitted report is approved. The red percentage displayed compares the licensees results vs the overall average.
Red Flags:
Is the licensee performance against the average decreasing sharply over time?
The "Report Analysis" chart displays the Top 10 (and Bottom 10) performers by product (SKU), property, category, territory, and distribution method. Mouse over any item on the graph to see how the licensee compares to the average of all licensees that have approved royalty reports containing the same item. In the example above, the licensee earned royalties of $9,140 for the displayed category, compared to the licensee average of only $4,685 for the same category.
Use the Analysis drop down menu to view the analysis results by Product (SKU), Property, Category, Territory, or Distribution Method
Use the Trends drop down menu to view the analysis results for Net Sales or Quantity Sold.
Use the Top 10 and Bottom 10 radio button to switch views.
Click "Export Report Summary" to view all results in Excel
Red Flags:
1. Are there any territories or products for which the license reported no sales?
2. Are the licensee results for a given item abnormally less than the average for that item?
4. Is the licensee making sufficient progress toward the minimum royalty guarantee?
Red Flags:
A large balance (red bar) could indicate that the licensee is not earning royalties at a pace sufficient to satisfy the guarantee, or is behind on their scheduled minimum payments.
5. Is the licensee on target to recoup all Advances?
Red Flags:
Some licensors choose to not renew agreements for licensees that do not recoup their advance payments with earned royalties.
6. Did the licensee report sales for unapproved products, territories, or distribution methods?
RoyaltyZone will notify licensors by email when licensees upload sales transactions for unapproved products (SKUs), territories, or distribution methods.
Red Flags:
1. Unrecognized items may simply be due to typos in the upload file, or could indicate breach of contract due to unauthorized sales
2. Compare the submitted report to the warning emails you receive to make sure the licensee is reporting sales for all items, including unapproved products, territories, and distribution methods.
7. Is the royalty report calculated properly?
RoyaltyZone's online royalty reporting provides a huge advantage over royalty reporting using spreadsheet templates: licensors and licensee can always be sure that the report is calculated properly. There are no formula errors, math mistakes, copy/paste errors, of incorrect application of agreement terms.
Click "View Report Details" to review the detailed report data and calculations:
1. Royalty Rates: the correct royalty rate is always used (including variable rates or MRU rates)
2. Deductions: only allowable deductions are permitted
3. Returns: are itemized in a separate table for review (as are exemptions, if permitted)
4. Currency: reports can be displayed in the report currency, or normalized to the desired account currency
5. Advances: the correct recoupable balance is applied
6. Fees: recurring fees, such as marketing contributions, are calculated and invoiced.
Red Flags:
1. Review the report details to make sure all terms are properly calculated and applied. Omissions are caused by incorrect setup of the agreement terms. Contact [email protected] if you need help making corrections.
2. Are Net Sales deductions or Returns within the cap limits defined by the license agreement?
8. Did the licensee use the proper terminology for the report? Is all of the required information reported?
Another big advantage of RoyaltyZone's online royalty reporting over spreadsheet templates: your required royalty data is always reported, and your desired terminology is always used. This provides you with the opportunity to instantly compare licensee performance and analyze results across your entire licensing program.
Red Flags:
Spreadsheet or paper royalty reports often contain unsupported calculations or insufficient detail. RoyaltyZone eliminates this potential red flag.
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