Outgoing Royalties Accruals

All business processes that are relevant for the Outgoing Royalties Settlement, such as incoming royalties billing, payment transactions in Financial Accounting (FI), product sales in Sales and Distribution (SD) and so on, are entered in the OR data collector and are assigned to the corresponding license acquisition contracts at a subsequent stage.

Since the revenues update event takes place before the OR settlement, the corresponding expense must be posted before settlement is performed (however, this posting must be made without payables).

The system determines the expected costs in a simulation run and posts these against an accrual account in FI.

The Accrual Engine makes the accrual posting as follows:

Expense to accruals
The following postings are made when the settlement is transferred to FI
Expense to payables
Transferring the settlement to the Accrual Engine triggers clearing of the accruals that have been created for it
Accruals to expense

This graphic is explained in the accompanying text.

Posting steps 1–3

When the actual outgoing royalties settlement run takes place, the Billing Engine posts the effective payables and expenses.

Example Example

An accrual run is performed as follows:

Sales transactions lead to data being entered in the outgoing royalties billing due list, which requires outgoing royalties to be paid at a subsequent stage.
The system performs an accrual run for specific periods in which the outgoing royalties billing document is for example simulated using data in the outgoing royalties billing due list. However, no FI posting is made.
Data is transferred to the Accrual Engine, which makes the accrual postings in FI. Two types of transfer postings are created here: Actual accruals and transfer postings for recoupments of advances.
The activities described above are performed periodically until the actual settlement takes place.
The actual settlement makes postings to the respective expense accounts and triggers clearing of postings that have previously been made in the Accrual Engine.

End of the example.

Prerequisites

Caution Caution

Accruals can only be calculated for outgoing royalties and this calculation is only possible if the IPM_ACCRU and ACE features are active in the IPMO application.

End of the caution.

IPM Settings

Activate the IPM_ACCRU and ACE features in the IPMO Billing Engine application from the path listed below. Refer to the system documentation for the IPM_ACCRU feature, which describes the special aspects to be observed during editing of contract items for which accruals are to be created.

Activity

Menu Path

Adjust Billing Engine Application for Settlement of Outgoing Royalties

Start of the navigation path SAP Implementation Guide Next navigation step Customer Relationship Management Industry-Specific Solutions Media Intellectual Property Management Billing and Settlement Outgoing Royalties End of the navigation path

Alternatively, a simplified interface that allows you to activiate the IPM_ACCRU and ACE features is available by way of the Configure Application Customizing activity (from SAP Customizing for Customer Relationship Management, select Start of the navigation path Industry-Specific Solutions Next navigation step Media Intellectual Property Management Billing and Settlement Configure Application End of the navigation path ).

Define enhanced item category determination in the IPMO application for the IPM: Standard Accruals (1SAP_ITC_ACR) determination procedure.

Activity	Menu Path
Maintain Enhanced Item Category Determination	SAP Implementation Guide Customer Relationship Management Industry-Specific Solutions Media Intellectual Property Management Billing and Settlement Item Category Determination Enhanced Item Category Determination for IPM License Settlements

Make the following settings if you want to create accruals with the item categories specified for exploitation-dependent royalties billing request items (BRIs) from acquisition and service contracts.

Examples

Billing item category –> Accrual billing item category

IBB2 –> IBR2

IEB2 –> IER2

Activity	Menu Path
Define Item Categories for IPM License Settlements	SAP Implementation Guide Customer Relationship Management Industry-Specific Solutions Media Intellectual Property Management Billing and Settlement

Note Note

The IBR2 and IER2 item categories are supplied as examples

End of the note.

Caution Caution

When creating your own item categories, you should ensure that the assigned billing type has the accrual billing document category.

End of the caution.

You should also ensure that the Customizing settings have already been made in the IPMO Accrual Engine component (refer to the documentation on revenue recognition).

Note Note

If you use cross-contracts advances, see Customizing settings for cross-contract advances with accruals described in the Configure Cross-Contract Advances Customizing activity (in SAP Customizing for CRM, select Start of the navigation path Industry-Specific Solutions Next navigation step Media Intellectual Property Management Transactions Configure Cross-Contract Advances End of the navigation path ).

End of the note.

SAP ECC Settings

To determine accrual costs and post these against an accrual account (or an account of your choosing), you have assigned company codes, defined accounting principles and opened the fiscal year for accrual postings.

Activity

Menu Path

Assign Company Codes

Accounting Principles –> Define Accounting Principles

Open Fiscal Year for Accrual Postings

Start of the navigation path SAP Implementation Guide Next navigation step Financial Accounting General Ledger Accounting Business Transactions Accruals for Rights Management Accruals for License Acquisitions Basic Settings [...] End of the navigation path

Define the accrual types required.

SAP supplies two accrual types in Customizing as standard:

The Accruals for license acquisitions accrual type results in accruals being cleared when the billing document is triggered.
The Recoupment of advances for accrual accrual type triggers a posting of accruals from the recoupment of advances to the account selected. Postings are made automatically, meaning that you do not need to schedule a periodic run.

Note Note

If the automatic posting has a negative impact on performance, choose the Periodic Only entry in the AccPtg field (accrual type designed for postings). Note that you must select the Periodic Run option in the Accrual Engine in this situation.

End of the note.

Activity	Menu Path
Define Accrual Types	SAP Implementation Guide Financial Accounting General Ledger Accounting Business Transactions Accruals for Rights Management Accruals for License Acquisitions Basic Settings Accrual Types Define Accrual Types

Activity

Menu Path

Assign Accrual Types to Transaction Type

Maintain Condition Types Relevant to Provisions

Define Standard Settings for Calculating Accruals

Note Note

Note that the standard settings for calculating accruals are not relevant to the opening posting. If the accrual type requires a periodic posting to be made, you must select the default accrual method or overwrite the existing values if a different accrual type is required.

End of the note.

Activity

Menu Path

Define Posting Control

Set up Account Determination

Caution Caution

Clearing against an alternative account is possible during account determination. In this situation, you must use the BILLED parameter to ensure that clearing to a different account is possible.

End of the caution.

Process

Create Accruals

You must perform a periodic accrual run to create accruals. This accrual run is a settlement simulation on the basis of all available values.

Accruals are always created for the next settlement date for a license acquisition contract. This means that several accrual runs can take place before the actual settlement is performed.

To maintain the parameters of the accrual:

Access the license acquisition contract for which you need to define accruals.
In the contract hierarchy (Contract Overview pane), select the node corresponding to the Rights and Royalties or Royalties scope in which you are defining the accruals.
In the Accruals assignment block, select Edit and specify the accrual data.
Save the contract when you are finished.

To create accruals:

In the License Acquisition work center, move to the Search pane and select Billing Due List Items.
Search for the required billing due list items. Accrual items are identified with a billing type of OR Standard Accruals.

Select one or multiple accrual items and proceed in the same way as you would for billing of standard billing due list items. For more information, see Billing.

Example Example

Settlement is for example performed for an acquisition contract every six months. Sales, which are relevant to this acquisition contract, are made every month. In this situation, accruals must be adjusted accordingly every month.

Since the accrual run is a settlement simulation, recoupment of advances is simulated here: If advances that are recoupable against variable revenues have already been paid to the royalties recipient, the system does not create any accruals until the advances have been exhausted.

The value to be cleared can for instance, be posted from an advance account to an expense account even if no accruals are to be created.

End of the example.

Clear Accruals

During the actual settlement of outgoing royalties, amounts that have been accrued for this date are cleared. This means that postings for creating accruals are reversed. Postings that result from recoupment of an advance are also cleared here: They are replaced by expense postings for the actual settlement.

For more information, see Billing.

Note Note

Accruals can be based on values that are not settlements. In this situation, alternative Customizing settings should be made for the various billing item categories and billing types.

End of the note.

Example Example

Payment has not for example been made for a billing document from a sales transaction. Accruals have been created for this but they have not been cleared, since no outgoing royalties settlement has taken place.

If the accrual created contains business transactions that have not been included in this settlement, these business transactions are re-evaluated and posted as an accrual for the next settlement date.

In this situation, this amount is cleared for the old settlement date and recalculated and posted again for the next settlement period. This takes place automatically if the entire accrued amount is cleared, since the next accrual run takes account of the transaction for which settlement has not yet been performed.

End of the example.