Advance and Minimum Guarantee 
In Intellectual Property Management, a purchaser acquires specific rights to an IP, where the purchase price is frequently not defined in advance, but is a variable payment (known as royalties), which are dependent on the exploitation success of the IP. The seller and the purchaser frequently agree advances or minimum guarantees, which enhance the variable royalties.
Use of an advance
An advance is an amount agreed in the contract, which the purchaser usually pays at the start of the contract validity period and against which subsequent royalties due are offset.
Billing of an advance generates a “credit” in the Billing Engine application (BEA).
Billing of a recoupable item against this advance generates a clearing item, which absorbs some of this credit as a “by product”. If the credit memo is greater/equal to 0, no additional clearing items are generated.
Caution
IPM only supports recoupment of advances as partial credit memos and only as a recoupment against billed values.
The following types of advance are possible:
Guaranteed:
Any remaining amounts remain with the licensor at the end of the runtime.
Repayable:
Any remaining amounts are repaid to the licensee at the end of the runtime.
In both cases, a final invoice item must be created as a sub-item of the advance, so that the necessary clearing steps are performed in the Billing Engine application and, if necessary, FI, at the end of the runtime. See also Contract Scenario 2: Variable License Revenues with Advance2.
Use of a Minimum Guarantee
A minimum guarantee describes a target value that is to be reached cumulatively by a certain defined point in time using recoupable items. Recoupable items increase the actual guarantee value that is valid for the minimum guarantee when they are settled. This actual value is compared with the target value during settlement of the minimum guarantee. If it is less than the target value, a subsequent payment is required.
Prerequisites
Different Customizing settings are required in conjunction with advances and minimum guarantees for the contract and billing to ensure that transfer to the BEA IPMI and recoupment during billing function correctly.
Customizing settings for recoupment of advances and minimum guarantees are found under the same IMG path (specified below).
Note
Note that advances and minimum guarantees are not relevant to the difference calculation.
To ensure that you can agree advances and minimum guarantees in the contract, define all item categories to be used for advances and minimum guarantees as being relevant to billing (billing following contract release). This means that advances and minimum guarantees are transferred to the Billing Engine application following contract release.
NoteMilestone billing request items can also be used for advances and are subject to the same clearing logic as other advances.
End of the note.Activity
Menu Path
Define Billing Relevance of Advances/Minimum Guarantees
Customer Relationship Management 
Transactions Basic Settings Define Item Categories 
To use an item category as an advance or minimum guarantee in the contract, select a suitable value in the Clearing Relevance field for this item category in the IPM-specific Customizing settings as follows:
Activity
Menu Path
Define Settings for IPM Item Categories
Customer Relationship Management Industry-Specific Solutions Media Intellectual Property Management Transactions Settings for IPM Transactions Define Settings for IPM Item Categories Define the data values required for clearing:
Activity
Menu Path
Define Data Values
Customer Relationship Management Industry-Specific Solutions Media Intellectual Property Management Basic Functions Pricing Define Data Values Define clearing control for the relevant BEA item categories.
Activity
Menu Path
Clearing Control
Customer Relationship Management Industry-Specific Solutions Media Intellectual Property Management Billing and Settlement Clearing Control Select the IPMI application and maintain one or more entries as required (or copy the Customizing settings provided).
You can also define requirements that are evaluated in clearing control if necessary. By making read and update rules dependent on requirements, you can represent more complex scenarios similarly to recoupment of advances.
Activity
Menu Path
Define Requirements for Clearing Control
Customer Relationship Management Industry-Specific Solutions Media Intellectual Property Management Billing and Settlement Define Requirements for Clearing Control
Settings for recouping a royalties item against the credit balance of the licensee are found in the Customizing settings provided or the IMG documentation on clearing control.
Several advances and minimum guarantees can be combined as a group in the Advance/Minimum Guarantee group = AMG group), by creating one of these items as the main item and the other items as sub-items. This grouping is used when royalties are recouped against advances or settled for minimum guarantees: A royalties item only ever explicitly references the main item for this AMG explicitly and therefore the entire group implicitly. This reference is set by the user manually and means: “This royalties item (and all of its billing request items) can be recouped against all advances in the group and contributes to the actual guarantee value of all minimum guarantees in the group”).
To create this grouping, choose the following path in the SAP Easy Access menu path Industries Media: Intellectual Property Management License Sales Maintain License Sales Contracts and enter the reference item in the RefItm field on the General tab page.
Note
Advances and/or minimum guarantees cannot be regarded collectively unless they have a hierarchical structure.