Royalty Reporting Finished - How do you Feel?

The right royalty system will improve your financial record keeping AND could save you a substantial amount of time & angst

As you read this you may be in the middle of another painful royalty reporting season. Hopefully you’ve finished – if so, how was it this time around? Did you come up against the same old challenges, or even discover some new ones? Maybe we can help.

The amount of data involved in the distribution of royalties is increasing - the way income is being generated and recorded is evolving. However, we firmly believe that the matching of incoming royalty statements to your titles should not be difficult. Creating and sending statements to your clients should then be a seamless, largely automated process.

A good royalty system will also inform your overall accounting process - accounts preparation will be quick and easy, audits (relatively) painless and tax returns straightforward. As a publisher, systemising your finances should give your records improved accuracy, transparency, and make the processing of royalties more efficient. In a former life I was an accountant and auditor and so I understand the importance of timely and accurate financial data. It was my job to check the accounting records of companies to ensure their Financial Statements were accurate and gave a true and fair representation of financial position and performance.

Choosing the right royalty system will improve your financial record keeping and could save you a substantial amount of time. Thinking it’s time for a change? Here are four key things to consider:

1. Does your royalty system provide automation and control?

Manual, repeatable processes can be automated to save you time and give you control of your finances: matching incoming royalty statements to your works and therefore clients should not take an age and nor should creating and sending statements.

  • A good royalty system will be able to ingest the royalty statements you receive (from your collection agencies, sub-publishers or retailers). And once this, often imperfect, data is ingested, the better systems will efficiently match this data to the clients you represent. A system with inbuilt intelligence can make this process feel much more manageable. Royalty processing is as much an exercise in data cleansing as it is an application of accounting rules.
  • When it comes to compiling and sending statements to your clients a good royalty system will not only allocate royalties to the correct client but also to the correct accounting period to ensure payments are not duplicated or missed. A system that automatically sends statements directly to your clients will save you yet more time.

2. Will it maintain transparent financial records?

Maintaining an accessible audit trail should be the cornerstone to any royalty system, especially important if your system claims to automate much of the process for you.

  • When it comes to maintaining accurate financial records and making appropriate payments to your clients, you cannot delegate accountability and responsibility to your royalty system. You remain in charge! The system cannot operate as a ‘black-box’ – you need to understand how royalties have been distributed and dig into the detail if necessary.
  • Your system also needs to be adaptable to the changing demand for information. Well-structured database solutions are easily interrogated to enable the corroboration of transactions, substantiation of financial reporting and provision of information to your clients.

3. Can it produce insightful reporting?

Effective reporting will identify business opportunities and highlight areas of weakness. They can save time and energy, avoiding lengthy investigations when trying to evidence a transaction or understand a problem or potential opportunity.

  • A system built around a structurally sound database can quickly interrogate your financial records to tell you (and your auditors) client critical information such as:
    • what royalties you have collected on your client’s behalf
    • which clients you have paid
    • when and how much they were paid
    • how much they are owed

  • Historic earnings should be readily available. Being able to ‘slice and dice’ your royalty data can tell you a lot about your business, for example:
    • highlight where you are performing well and what needs attention
    • identify the earnings of albums/genres/catalogues/composers/territories
    • place a value on tracks and/or albums to inform decisions on sale or re-release
    • Forecasts and budgets are grounded in an understanding of historic performance. No one publishing business is the same and therefore the demand for information will vary. A good royalty system will provide all the necessary insights and also have the flexibility to customise reporting output.

4. Will it scale as my business grows?

Your royalty system needs to scale with your business. As your client base grows so will the processing demands on the software you are using.

  • The amount of data involved in the distribution of royalties is also increasing. There are a growing number of statements to consume, an expansion in the granularity associated with each royalty line and an increasing number of micro payments. This is leading to more and more data being passed down the royalty chain. Some systems will struggle to keep pace.
  • A cloud-based royalty system minimises your own computing hardware requirements, allowing you to enjoy a fast and secure royalty processing experience without the need for on-going investment in technology and headcount.

At RoyaltyCloud we have built a platform that you can trust and one that will grow with your business. Get in touch to find out more and join our growing community of users.

Russell Tew 15th Sep 2021