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QuickBooks Royalty Software Setup

January 30, 2011 By

If you want to use QuickBooks with your royalty software here are the actions you should take to facilitate this integration.

1. Author Imports: Assign royalty recipients a vendor type. This will allow you to filter your QuickBooks vendor contact list export to include only royalty receipients.

 

2. Product Imports: Add royalty defining fields to your items (products). If you have royalty rules that pay a different royalty based on product format; such as a 20% of net sales on eBook sales, you must define a new product field in your item list to reflect this. This will allow you to export product information from QuickBooks and import it into your royalty software.

3. Sales Imports: Apply sales discounts to each invoice line item. Most royalty software sales import rountines want to see the sales discount incorporatated into each line item (i.e. sales amount is the net after the discount is applied). Some QuickBooks users enter the discount  for the whole invoice as a single line item. Easy Royalties supports both line item discounts and invoice level discounts.

Easy Royalties royalty software sales import discount options:

 

4. Accounts Payable Imports: Purchase Transaction Pro Importer from BayStateConsulting.com. With this software you can import the royalty software’s calculated payments owed to royalty recipients into QuickBooks.

Filed Under: Accounting Tagged With:

Royalty Metrics

September 1, 2010 By

Can you name the metrics that every royalty manager should know?

They are;

  1. Royalties payable in total and by period
  2. Royalties advance payments owed
  3. Unearned royalties
  4. Reserve for returns
  5. Royalty expense in dollars and as a percentage of sales
  6. Number of royalty contracts, authors and products
  7. Number of active royalty products with no contract entered in the system

A royalty manager is expected to know these numbers and to be able to summarize them during management meetings.  A typical summary might be;

“Our royalties payable totals $800,000 of which $350,000 is due and payable by August 31st and $450,00 is payable by March 30th of next year. We have no past due royalties. Our unpaid royalty advances total $50,000, of which we expect to pay $30,000 out in the next three months. Royalty expense for the year to date is 11% of sales, this is an increase over the 10% rate we paid during the same period last year. We are managing  400 royalty contracts signed with 300 authors for 1,200 active products. A royalty contract has been entered for every active product in our system.”

This summary tells management; and the CFO, how much cash is needed to pay contractual obligations. It also tells them when these funds are needed for royalties payable and contracted royalty advances.

The last sentence; “A royalty contract has been entered for every active product in our system”, confirms that the royalty expense is not understated because a royalty contract for a new product had not been created.

Filed Under: Accounting

Separate Unearned Royalties from Royalties Payable

September 1, 2010 By

Do you lump unearned royalties in with your royalties payable? If so, you are not following generally accepted accounting principles (GAAP).

According to GAAP unearned royalties (an asset) should not be combined with royalties payable (a liability) on the balance sheet.

Unearned royalties are an asset. They occur when you have overpaid royalties when returns for a period exceeds the periods sales – thus creating a negative royalty expense.

Royalties payable are a liability that you need to payout in a defined period of time. If you lump them together you understate your payables and give management a false impression as to what the true liability.

Example – the correct method

1. Asset: Unearned Royalties  $500, Liabilities: Royalties Payables $1,500

Example – the incorrect method

2. Liabilities: Royalties Payable $1,000 ($1,500 credit plus $500 asset)

When evaluating royalty software ask if the software seperates unearned royalties from royalties payable. So do and some don’t. If they don’t ask the vendor how to obtain the balances for each account. Your accounting staff will need to know this if they want to pass an audit without an adjusting entry from the auditor.

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Royalty Backup Drive Recommendation

September 1, 2010 By

ioSafe USB drives are a cost effective way to protect your royalty data. These drives are used by organizations such as the USA Navy, NASA, McDonalds, and Oracle. These drives are affordable – prices start at $250 for a 1TB HD with a 3 year warranty. With a weight of 15 pounds these drives are less likely to be stolen.

When used with an online backup service this drive can serve as an effective part of your data protection strategy.

Fireproof — protects data from loss up to 1550°F for 1/2 hour

Waterproof — protects data from loss up to 10ft for 72 hours

Data Recovery Service – Up to $2500 for forensic recovery w/ Advanced Replacement

eSATA/USB 2.0 or USB 3.0 connectivity

Windows Server, Linux, Mac and PC Compatible

Capacities from 1TB to 2TB

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