Archives for February 2015

V4 – Royalty Schedules

In our royalty software every royalty contract is attached to a royalty schedule.

The royalty schedule determines 1) when royalty statements are generated, 2) the royalty statement format, 3) where PDFs of the statements are stored and 4) what email template is attached to emailed royalty statements. [Read more…]

V4 – Reserve for Returns

The royalty software supports a royalty contract clause that allows the licensee to hold back a portion of royalties earned to cover future returns from sales made during the royalty period. This is referred to as a reserve against returns.

A book publisher’s reserve for returns clause may allow the publisher to withhold a “reasonable reserve” or it may specify the reserve as a percentage of the royalties payable to the author.

The reserve clause for a publisher paying royalties semi-annually or annually may state that the reserve will be withheld for no longer than one royalty period. For a publisher paying royalties quarterly this clause usually allows the publisher to withhold the reserve for two or four royalty periods.

Example:

“The Publisher may maintain a reserve against returns of ten percent of the amount due to Author, and Publisher shall indicate such reserve, if any, on the Author’s statement of accounting. The reserve will be withheld for no more than one accounting period.”

“The Publisher may maintain a reserve against returns of 25 percent of the amount due to Author for the first two royalty periods. Thereafter the reserve rate shall be based on the actual returns rate for the period. The Publisher shall indicate such reserve, if any, on the Author’s statement of accounting. The reserve will be withheld for no more than one accounting period.”

“The Publisher may maintain a reasonable reserve against returns from the amount due to Author. The Publisher shall indicate such reserve, if any, on the Author’s statement of accounting. The reserve will be withheld for no more than one accounting periods.”

Royalty Software Implementation

In the royalty software this is handled from the royalty contract’s reserve rules menu item.

Royalty Software Reserve for Returns

A royalty contract can have one rule or several returns for reserves rules.

Each rule can apply to specific product formats, sales type or only earnings from a specific royalty rule. Many publishers do not withhold as reserve on eBook sales.

Example

The example below shows a reserve for returns rule that applies only to earnings from sales of hardcover and paperback editions. No reserve is withheld from sales of the eBook edition.

1. The reserve rule applies to hardcover and paperback editions.

2. The reserve rate is based on royalty earnings.

3. The reserve period field specified for how many royalty periods the reserve is held. Publishers paying royalties annually or semi-annually tend to hold back reserves for one royalty period. Publishers paying royalty quarterly tend to hold reserves for 4 royalty periods (1 year).

4. The recovery period field specifies the number of royalty statements over which the released returns are paid to the author. A value of 1 means that 100% of the reserves are released in one statement. A value of 4 would release 25% of the withheld reserve each royalty period.

RoyaltyReserve02

Royalty Statement Options

The royalty software has an option to include a schedule of withheld reserves for returns and their release date(s) on the royalty statement. To show this schedule from the royalty statement document’s totals tab select show reserve account summary.

Royalty Software Reserve Schedule Print Option

 

Version 4 – Author Minimum Payments

Many royalty contracts have a minimum payment clause. This clause states that if the amount payable is under a specified amount, the payment amount will be rolled over to the next period. [Read more…]