Royalty Calculation Process

Overview

Ad Magic uses the Royalty module to calculate the royalty payable to designers.

Setup

• Set up Designers as Salesforce Accounts

• Owned or Consignment???? By Order????

• Set up Royalty Rate by Item, Designer/Vendor, and Channel Type

• Set up a service item for Purchase Invoice

  • Update Company Setup ‘Royalty Payment Service Item’ field to link to this service item.

• Royalty Rate Setup

  • Game: Designer’s game (Item)

  • Designer/Account/Vendor: Points to the Account table.

  • Sales Type: A picklist with the values “B2B” or “B2C”

    • Values are from Total Sales.

    • Total Sales defaults Sales Type to “B2C” when Sales Orders are from Shopify. If it’s not from Shopify, it will default to “B2B”.

    • Ad Magic has a routine to create GF Sales Orders from Total Sales. The routine must populate the Sales Type field.

    • If a Sales Order is created manually, the Sales Type defaults to “B2B” but can be changed.

  • Rate Type: A picklist with values “%” or ”Unit”

  • Rate:

    • The numeric field will be a percentage if the Rate Type is '%’

    • The numeric field will be the $ amount per unit if the Rate Type is ‘Unit'.

  • Unit COGS: Cost of goods sold per unit.

  • Deduct COGS: If Checked, the system will deduct the total cost of goods sold from the royalty amount.

Open

Royalty Calculations

1. Navigate to Royalty Calculation

2. Click the Calculate Royalty button

3. Month End defaults to the previous month’s last date.

4. System will:

   1. Gather all games (items) with a royalty rate setup

   2. Retrieve all Sales Invoice Lines with the following criteria:

      1. Sales Invoices' Document Status = Posted

      2. Items that are set up in the Royalty Rate Setup table

      3. The invoice lines do not have a Royalty Calculation Line linked

      4. Posting Date <= the Month End date

• Each unique combination of Year/Month, the Designer Account and GL Ledger will have a Royalty Calculation.

• Royalty Amount calculation logic:

  • Line COGS = Invoiced Qty. * Unit COGS

  • If Deduct COGS is checked:

    • Then Royalty Amount = Royalty Amount - Line COGS

  • If Royalty Rate’s Rate Type setup is “%”:

    • Then Royalty Amount = Sales Amount * Rate / 100

  • If Royalty Rate’s Rate Type setup is “Unit”:

    • Then Royalty Amount = Invoiced Qty. * Rate

  • Multiple Royalty Calculation Lines will be created if more than one designer is set up to receive royalty payment for one particular item in the Royalty Rate Setup table.

• Manually enter Royalty Payments. (Automation is possible)

• Ad Magic reviews and then pays the Remaining Payment. (Automation is possible)

Fields List: Royalty Calculations

Fields List: Royalty Calculations Line

Security

Only users who are allowed to access Accounting Seed can access the Royalty Calculation module.

Create Purchase Invoices

1. Navigate to Royalty Calculation

2. Click the Create Purchase Invoices button

3. ‘Month End’ defaults to the previous month’s last date.

4. System will:

   1. Retrieve all Royalty Calculation Lines with the following criteria:

      1. The Royalty Calculation Lines do not have a Purchase Invoice Line linked

      2. End of Month <= the Month End date

   2. Get Division from the Sales Invoice Line. The system will use the Division from the Sales Invoice if the Division is blank on the invoice line.

5. Each unique combination of Division, Year/Month, and Designer account will have a Purchase Invoice.

6. Navigate to the Purchase Invoices page to review the newly created Purchase Invoice under the “Open Royalty Payment” list view.

   1. After the purchase invoice is posted, it will appear under the ‘Posted Royalty Payment’ list view.

Royalty Payments

Create Vendor Payments every quarter.