??85% Alert: Maximize Trust & Revenue

Intellectual property (IP) is not just a driver but the backbone of organizational value. Yet, effective IP management goes beyond creation and licensing; it demands vigilant oversight to ensure complete and accurate royalty revenue collection.

The Stark Reality: 85% Underreporting ??

A staggering 85% of audited licensees underreport and underpay royalties, a clarion call to licensors globally. At Connor, we're committed to reversing this trend through diligent royalty audits.

Trust, But Verify - Your Must-Follow Mantra ???♂?

Echoing Ronald Reagan's wisdom,

"Trust but verify"

is essential in IP management. Surprisingly, many licensors overlook the crucial audit clause, potentially forfeiting significant revenue.

Royalty Audit: The 100% Compliance Key ??

Royalty audits are vital for agreements with substantial revenue, enhancing compliance and licensee reporting. These audits do more than verify; they foster discussions on IP management and contract interpretation, boosting relationship quality and reporting accuracy.

Unveiling the Numbers: Royalty Reporting Pitfalls ???

Decades of experience have illuminated common yet critical issues in royalty reporting, often leading to millions in lost revenue:

1. Inaccurate Reporting (2/10): Identify instances of inaccurate or incomplete reporting of sales, revenue, or other contractual obligations. This includes underreporting sales that should contribute to royalty calculations.
2. Territory and Scope Violation: This section highlights instances where licensees may be exceeding the scope of their agreements by selling products or services in regions not covered by the agreement or using assets beyond authorized terms, such as unlicensed use and unauthorized distribution channels.
3. Marketing and Advertising Expenditures Shortfall: Addressing situations where spending on marketing and advertising needs to meet the levels, forms, audiences, or other critical metrics anticipated.
4. Disallowed Deductions (2/10): This section points out expenses or costs that are not permitted to be subtracted from royalty calculations as outlined in the agreement terms, further reducing reported royalties.
5. Royalty Calculation Errors (1/30): Uncovering mistakes in royalty calculations that lead to underpayments.
6. Unlicensed Trademark Usage: Identifying unauthorized or incorrect use of trademarks, logos, or other brand assets.
7. Questionable Licence Interpretation (4/10): Nearly half of all issues significantly impact royalties due to misinterpretations, highlighting the need for clear and unambiguous license agreements.
8. Mathematical Errors (1/50): Simple calculation errors that can significantly affect the accuracy of royalty payments.
9. Unreported Sub-licence (1/20): Income from sub-licensing activities that goes unreported, leading to revenue losses.
10. Unreported Benchmarks or Milestones (1/100): Failing to report key financial or product development milestones as required.
11. Transfer Prices (1/100): The incorrect application of transfer pricing affects royalty calculations and potentially reduces the royalties owed.

Shockingly, in 25% of all audits, licensees underreported the royalties owed by more than 100% of the total amount reported. This level of discrepancy underlines the urgent need for rigorous compliance measures.

Monitoring and Managing Changes ??

The dynamic nature of technology and business mandates constant vigilance over changes in territory, manufacturing, or distribution methods. Any red flags across the spectrum of license agreements call for a deeper dive into reporting practices.

Action Plan for Maximized Compliance ?

To ensure compliance, it's critical to communicate development expectations to licensees regularly and maintain a robust license database. Properly managing agreements and relationships is key to identifying and correcting reporting inaccuracies.

How Connor Elevates Your Royalty Audits ??

At Connor , we approach royalty audits with precision and customization, diving deep into licensee records to uncover discrepancies and ensure compliance. Our strategy not only aims to rectify past errors but also to instill accurate reporting practices for a healthier licensor-licensee relationship.

Conclusion: IP as a Critical Asset ??

Accurate reporting and payment of royalties are indispensable in business, where IP is a critical asset. By harnessing Connor's royalty audit expertise, your organization can confidently claim every penny it's owed, moving from underreporting to a future built on trust, compliance, and financial success.

?? Boost Your Royalty Compliance with Connor

Interested in bolstering your organization’s royalty compliance? Contact Connor . Together, let's protect your intellectual property and enhance your licensee relationships.

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