Royalty Management with Microsoft Dynamics AX
Royalty management is intended for companies who exercise the right to use the third party's assets and/or intellectual property and helps them better manage their royalty agreements through automation of tasks involved in administering, tracking, and making the royalty payments. A royalty is an agreement between one party: the licensee, with another: the licensor.
Royalties are commonly paid to artists, musicians or other persons or businesses who own intellectual property. Sometimes royalties are paid upon the sale of an item and sometimes they are paid for each time the item is used. The use of someone else's artistic or intellectual property should be negotiated in a contract before any payments are made.
Microsoft Dynamics AX provides functionality to manage royalty agreements, book accruals and manage payments. Royalty Agreements in Microsoft Dynamics AX can be defined based on multiple parameters including a percentage or fixed amount that will be paid to each vendor and the rate at which the vendor will be paid. You can use the royalty agreements form to create the royalty terms and track the progress throughout the life of the royalty. Microsoft Dynamics AX allows customers to setup royalty contract in terms of the payments that are to be made. Microsoft Dynamics AX calculates and post the liabilities and make the payments.
Setup Account Payable Parameters
- Select starting day for weekly cumulation of royalties
- Specifiy the accrual and expense account
Define Royalty Agreements
- Select the Vendor
- Select the calculation date type
- Specifiy the start/end date
- Specifiy cumulative period
- Specifiy the amount type
- Specify the items
Create and Invoice Sales Order
- Automatic Generation of Royalty Claims
Manage Royalty Claims
- Approve Royalty claims
- Cumulative royalty claims
- Automatic posting of vendor invoice
- Process and issue Vendor payment
The benefits of using a royalty calculation processor include the following: Reduced manual calculation errors, visibility of accrued royalties, and visibility of total royalties paid, on-time payments, and controlled statuses.
Royalty Agreement determines the basis on which the royalty amounts would be calculated. The royalty calculation can be handled based on one of the following date types: (1) on the date when the sales order was created, (2) on the requested receipt date of the sales order, or (3) on the requested ship date of the sales order. The calculation can also be based on a certain amount per sold unit, a fixed amount for a range of quantities sold, or a certain percentage of the net amount sold. In the example below, the royalty calculation occurs at the point when the sales order is created for a percentage.
The item on which the royalties are calculated can be defined at the header level but in the case that the royalty is payable to one vendor on all sales and to another vendor on sales of a specific item, the specific item will be described at the line level. As those items are invoiced through a sales order, the royalty claims are created automatically.
After invoicing a sales order, Microsoft Dynamics AX cumulates royalty claims. The royalty amounts can be cumulate on each invoice, week, month, year, or personalized period. In case approval is required on royalties, the royalties can only be cumulated after approval has been given.
Royalty claims will remain in the list view with one of the following statuses until they have been cumulated:
- To calculate: the final royalty amount is pending completion of the cumulate royalties run. This status applies to royalty claims that are generated from weekly, monthly, or yearly agreements
- Calculated: the claim was cumulated and is pending approval
- Approved: the claim had been approved if approval is required
- Mark: the claim is available for processing
- Processed: the claim was processed and a vendor invoice was posted
Once the royalties are cumulated and processed, the status will change to “completed” and the vendor invoice will be posted and available for payment. For additional questions on Royalty Management, please email us firstname.lastname@example.org.