Easy Royalties
Contracts: Cash Basis
Easy Royalties Contracts: Cash Basis 1 SUMMARY Easy Royalties can calculate royalties payable on an accrual basis or cash basis. • •
Accrual basis recognizes revenue when the sale is invoiced Cash basis recognizes revenue when payment is received.
Invoice Date
Amount
Payment Date
2/01/2015 2/10/2015
$300 $200
4/02/2015 2/15/2015
Quarter 1 Accrual Basis
Sales Quarter 1 Cash Basis
$300 $200
Quarter 2 Cash Basis $300
$200
For accrual basis royalty accounting the invoice date determines the royalty period. For cash basis royalties, the payment date determines the royalty period. Easy Royalties users typically handle cash basis royalties in one of two ways. 1. Each royalty contract has a cash basis royalty accrual rule. The sales import file is populated with the invoice date; the sale date, and the payment date. 2. They create a sales file that has the payment date in the sale date field. This method does not require a cash basis royalty accrual rule.
2 CASH BASIS ROYALTY CONTRACTS Cash basis royalties is specified in the Royalty contract > Royalty rules tab. For sales activities, by default royalties accrue as soon as the sales entry is recorded (without being marked as paid). To change this setting add an accrual rule. For licensing and permission activities, by default royalties for the contributor accrue after licenserelated income is received (after being marked as paid). To change this setting add an accrual rule. An accrual rule specifies the name of the rule, the sales type(s) that the rule applies to and whether royalties become payable when the sale is invoiced or the sale is paid for. The sales type criteria will apply the accrual rule to sales records coded with a specific sales type. The sales type can be specified in the file import or a manually entered sales record. The software can automatically assign a sales type based on customer name. www.royaltysoftware.net
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Easy Royalties
Contracts: Cash Basis
Easy Royalties > Royalty Contract > More… > Royalty Rules
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Easy Royalties
Contracts: Cash Basis
Easy Royalties > Royalty Contract > More… > Royalty Rules
3 SALES RECORDS 3.1 SALES RECORD For cash basis royalties, the payment received date field; on the Sales entry > More tab, determines the period for the royalty liability. If this field is empty, the royalty expense will not be calculated. Easy Royalties > Sales Entry > More tab
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Easy Royalties
Contracts: Cash Basis
3.2 SALES IMPORT For cash basis royalty calculations, the PaidDate field in the sales import file must be populated. If the cash basis sales report for the period has a payment date map this to the PaidDate field using the From (your column headers) field. If the cash basis sales report for the period does not have a payment date, enter the date of the last day in the period in the PaidDate’s or user this value field. This will populate all sales records with the specified date. Easy Royalties > Sales Import > Mapping
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Easy Royalties
Contracts: Cash Basis
4 QUICKBOOKS SALES REPORTS Users importing the QuickBooks Sales by Item Detail report can generate sales reports on an accrual or a cash basis. “For example, if you have not yet received a payment for an invoice, a cash-basis report on your sales will not include the amount of the invoice.” To specify the report basis, open the report and press the Customize Report button. Then select the report basis; accrual or cash. QuickBooks > Modify Report: Sales by Item Detail
WARNING: In QuickBooks if an invoice is partially paid the cash basis sales report will show a proportional amount of the revenue as income and the original total quantity sold. If you import several partial payments for an invoice the quantity sold will be overstated unless the quantity is adjusted.
5 CONTACT US If you have any questions please contact your customer support representative or email
[email protected]. www.royaltysoftware.net
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