How to Add Advances and Recoup Them from Royalties

Advances and other recoupable amounts can be deducted automatically from future royalties in details.

There are different ways to enter an advance, depending on what you want to track:

• add an Advance directly to a Royalty Account or Contract;
• add a general Recoupable directly to a Royalty Account or Contract; or
• enter the advance as a Cost on a Release or Product and then recoup that cost against royalties.

All three methods can reduce the royalties payable. The main difference is where the amount is recorded and how you want to see it later.

Option 1: Add an Advance directly to a Royalty Account or Contract

This is the easiest method if you have paid an advance and simply want to deduct it from future royalties.

Go to the relevant Royalty Account or Contract and add a new Balance.

Enter:

• Type: Advance
• Amount: enter a negative amount to deduct it from royalties
• Description: enter a clear description of what the advance relates to

For example:

The advance will be included in the royalty accounting and deducted from royalties.

Using the Advance type also keeps advances separate from other recoupable balances, so they can be displayed and tracked separately in your royalty data.

Option 2: Add a Recoupable directly to a Royalty Account or Contract

You can use the same direct Balance workflow for other amounts that need to be deducted from royalties but that you do not want to classify as an Advance.

Add a new Balance to the relevant Royalty Account or Contract and enter:

• Type: Recoupable
• Amount: enter a negative amount to deduct it from royalties
• Description: describe what the deduction relates to

Both Advance and Recoupable balances are deducted from royalties when entered with a negative amount.

The difference is their classification: advances have their own data point in details and can therefore be shown separately from other recoupable balances.

Advance or Recoupable?

Option 3: Add the Advance as a Release or Product Cost

Sometimes deducting the advance from royalties is only part of what you need.

For example, a manufacturing advance may also be part of the actual cost of producing a vinyl release. In this case, you may want the amount to be connected to the corresponding Release or Product and included in its financial reporting.

For a Release, go to:

Label > Releases > [Release] > Costs

For a specific Product, go to:

Label > Products > [Product] > Costs

Click the green + button and enter the cost information:

• Cost Date
• Description
• Cost Group
• Currency
• Amount Original Currency

For an advance, select the Cost Group Advance.

Advances entered as costs are automatically set to 100% recoupable.

Important: Adding a Cost does not automatically deduct it from royalties

A Cost and a Recoupable are two different steps in details.

When you add an advance or another cost to a Release or Product, the cost is first connected to that catalog item.

If you also want to deduct the cost from royalties, you need to account it as a Recoupable.

You can do this directly from the Release or Product by clicking Account Recoupable.

For multiple costs, go to:

Label > Statements > Recoupables

Select the relevant period and account individual items or use Account All.

Once accounted, the recoupable amount is transferred to the royalty accounting and will be set off against royalties.

Check the Contract’s Recoupable settings

For Release and Product costs to be recouped, the related Royalty Contract needs to allow recoupment.

Go to:

Label > Royalty > Contract > Recoupables

You can configure the contract to use:

• Recoupable by Groups – use this when only specific Cost Groups are recoupable or when different groups have different recoupment percentages.
• General Recoupables – use this when Release and Product costs are generally recoupable at the same percentage.
• No Recoupment – costs remain attached to the catalog but are not deducted from royalties.

The Cost Group Advance is recouped at 100% by default.

If you see Not Recoupable next to a Release or Product cost, check the Recoupables settings of the related contract.

Which method should I use?

Understanding the difference

The easiest way to think about the two workflows is:

Direct royalty workflow:
Royalty Account or Contract → Balance (Advance or Recoupable) → Royalty Statement

Catalog cost workflow:
Release or Product Cost → Contract Recoupment Settings → Account Recoupable → Royalty Statement

The first workflow is simpler when you only need to manage the royalty balance.

The second gives you more information because the original expense remains connected to the Release or Product and can also be used for catalog P&L reporting.

What happens if a royalty period has already been accounted?

Once a Balance has been included in a royalty statement, it is locked and cannot simply be changed or removed.

For Release and Product costs, details also protects periods that have already been processed for the relevant Royalty Account. New recoupables will be assigned to the next available open period instead of changing an already processed statement.

If you need to correct an Advance or Recoupable that has already been included in a statement, check the related statement and balance before making any changes.

Example: Manufacturing Advance

You have paid an artist or label a €3,000 manufacturing advance and want to recover it from future royalties.

If you simply want to keep track of the outstanding advance, add:

• Balance Type: Advance
• Amount: -3,000.00
• Description: Manufacturing Advance

If the €3,000 also represents the manufacturing cost of a particular vinyl product and you want that cost included in the product’s P&L, enter it under Product > Costs instead and then use Account Recoupable.

Both workflows can deduct the amount from royalties. Choose the second workflow when you also want the cost connected to your catalog.