Do you remember the last time you had to pull a report related to your IP licensing agreements? How about the last time you were audited? Chances are, you remember either of these events if you’re not using an ERP system. That’s because, more than likely, your team spent days (or weeks) gathering, analyzing, and presenting data that lives in various sources across your company.
If you’re stuck in a world of spreadsheets, managing the complexities of IP licensing, reporting, and audits in Excel or Google Sheets, it’s time to explore a better way.
Are You Licensing Intellectual Property?
Product licensing can be a lucrative deal for all parties involves—including the licensee and the licensor. This arrangement offers a great balance between risk and reward for both sides. Investors can earn significant rewards on their initial investments while major players can reduce R&D costs by partnering with reputable vendors.
With that said, it sounds easier on paper than it is in real life. If you’re still dealing with spreadsheets and sticky notes, you’re opening yourself up to audit troubles that could be extremely costly—both monetarily and human resource-wise. In today’s world, you need an enterprise resource planning (ERP) system that can handle the heavy lifting on your behalf. In doing so, you’ll eliminate unnecessary manual entries, unwanted human errors, and needless time waste.
Why Transparency Matters
The royalty and rights management processes require both accurate and transparent reporting. For instance, if you’re a licensee, your licensor will want easy access to the brand-related revenue you’re generating on that firm’s behalf.
Here are some questions to consider:
- Are your brand royalty rates determined in advance, or do you pay after the transactions occur?
- Are your brand royalty rates fixed or tiered? In other words, do you get a reduced fee if you meet specific sales thresholds?
- Is your organization still using a basic accounting application? If so, you’re not likely benefiting from the tools available today that could make everyone’s job easier.
If you’re struggling to answer these questions—or if you’d struggle to accumulate the information your licensors might request when they’re talking about these questions—you may not be offering your partners enough transparency into your processes.
That’s not to say you’re doing so on purpose. Of course, that’s not the case. However, if you’re using outdated or not-up-to-par methods, you could be earning yourself distrust with your licensing partner and not even realize it. Sure, you might be able to pull data into charts and graphs that are presentable for your partners, but how much time does that take? If it’s not readily accessible, you’ll likely cause friction with your licensors unknowingly.
With an ERP system that’s built specifically for licensing and royalties, you’ll avoid much of the laborious process that occurs when you have to file. Even if you’re able to extract the data you need from your systems without an ERP in place, your team will spend hours tracking down the information within your accounting systems, determining how much you owe your licensors. This lack of transparency is frustrating to all members of the partnership.
How MIBAR Has Changed the Game
Our team at MIBAR is aware of the complexities involving growing and mid-market firms that need to manage their royalty requirements. That’s why we developed a comprehensive, industry-specific software bundle that uses NetSuite as its foundation.
No matter who you’re licensing from, you now have the ability to do so with more confidence and less time. MIBAR has eliminated the need for cumbersome spreadsheets because, now, information can easily be uploaded into your NetSuite platform, confirming with any stated royalty reporting requirements for ease of use and access. This not only makes the filing process easier, but it also simplifies the audit process, should that need ever arise.
MIBAR’s goal is to help organizations attain a better level of audit integrity because all of the reporting lives directly in NetSuite. The platform stamps every transaction with calculated royalty values, right in the document of origination (the NetSuite invoice). This gives you access to a complete audit trail and hands you the controls to manage an audit when your licensors come back and want more information.
You can now easily track preset royalty percentages using a custom record called a “royalty code”. This code also tracks the effective start and end dates for each agreement. Once the product is shipped, NetSuite can easily generate an invoice using the sales order transaction information that was created from the royalty code.
If you prepay your royalties, NetSuite’s ERP now makes it easier than ever to map the royalty record, invoice quantity, sales price, and royalty percentage directly to your accounts payable records. If you don’t prepay your royalties, the system calculates the amount owned and creates a royalty record for individual line items directly on the invoice, which flow into the general ledger.
Learn More About Using NetSuite’s ERP to Manage the Complexities of IP Licensing, Reporting, and Audits
We invite you to download our white paper, Using ERP to Manage the Complexities of IP Licensing, Reporting and Audits, to learn more. This white paper explores the key challenges that growing and mid-market companies face when licensing IP from other companies and explains how cloud enterprise resource planning (ERP) can help these organizations automate their processes, save time and keep more of their profits.