Suggestions for Licensees to make royalty reporting (and, often, other Accounting tasks) easier and better—to take less time and be more accurate.
After visiting over 1,000 different companies, you pick-up some good ideas along the way - ideas that can make royalty reporting (and, often, other Accounting tasks) easier and better - to take less time and be more accurate! You also repeat yourself a few times! Sayitjustonce.com is a forum to share these ideas.
Licensee Recordkeeping and On-Site Compliance Reviews were written by Tom Harrison for Licensee Survival Guide—A How to Guide for Manufacturers, Lawyers and Businessmen (Jack Revoyr Kent Press © 1995 INTELIC). They reflect our emphasis of cooperation with Licensees to develop and maintain procedures, controls and systems to make sure royalty reporting is accurate and efficient.
Since this book was published there have been significant software changes, we discuss with Licensees, to make both reporting and testing easier and better.
The Licensing Industry has “grown up” putting few and minimal special recordkeeping requirements on Licensees. Licensors simply expect Licensees to maintain appropriate records to meet the various internal Management and governmental requirements. With these records, nearly all royalty reporting requirements will be met. In fact, it surprises many Licensees who ask, “Can you suggest a good royalty reporting computer system?” when I answer, “I probably would not have a computerized royalty reporting system.” Read further and I think you will see why I say this.
As mentioned in the prior chapter on Licensee Recordkeeping, licensing is unique in that the customer (the Licensee) must prepare the “invoice” (the royalty report) to notify the Licensor how much they owe. Good business judgment and common sense dictate that Licensors should periodically visit Licensees to verify the accuracy of the royalty reports and complete other contract compliance testing that must be, or is more easily, completed at the Licensee’s location. Licensors also have a duty to their other Licensees to complete these visits and tests. For Licensees competing with other Licensees, the On-Site visit is necessary to ensure competitors are also accurately reporting their sales and paying royalties in a consistent manner—that they are both “on a level playing field.”