This article highlights some of the royalty related mistakes that we encounter when our clients call us for assistance.
Number 1: All Sales are not imported
If your organization imports sales by month, overlooking one month’s of sales will understate your royalty expense.
The EasyRoyalties report: Sales Summary shows sales by month. If month has zero sales no sales were imported for the month.
If the sales numbers for a month don’t match your general ledger it means that a sales file was omitted. The EasyRoyalties report: Sales Analysis can show sales by customer (Amazon, Audible, Ingram, Barnes & Nobles, etc.), format (audio book, eBook, hardcover and paperback) and territory to help you spot the source of the understatement.
Number 2: Sales cannot be matched to a royalty rule
If you sell eBooks without creating a rule for eBook sales in the related royalty contract(s) the software will be unable to match a royalty rule to the sales record. This is called an unresolved royalty activitiy.
The EasyRoyalties report: Unresolved Royalty Activities lists sales transactions by title that could not be matched to a royalty rule. In the Data & Functions > Royalty Statements view a yes value in the unresolved activities column identifies statements that contain unresolved royalty activities.
Number 3: Invalid Royalty Share Percentage
Split refers to the percentage share of royalty earnings allocated to royalty beneficiaries. A book with two authors will have a split of 50%/50% if the authors share royalties equally. The percentage allocation for a title should equal 100%. A royalty split total that does not equal 100% is likely an error.
In the Data & Functions > Royalty Contracts view you can add a column that identifies royalty contracts with invalid (not equal to 100%) splits. Likewise, when you start the royalty calculation process the software will warn if some contracts have invalid splits.
Number 4: Missing Royalty Advance Payments
Royalty advances are payments made against a royalty beneficiaries future earnings. Royalty advance payments recorded in your accounting system for a period should match the advances recorded in your royalty software for the same period.
In EasyRoyalties you can view and print a listing of royalty advances payments for a period from the Data & Functions: Royalty Payments view.
Number 5: Missing Royalty Contract
Royalty software cannot calculate royalties for a property/product if their is not a royalty contract entered for that property.
In the EasyRoyalties software you can add a column to the Data & Functions: Titles view that shows the number of royalty contracts linked to a title. If this value is zero it means that no contracts have been created for this title.