Contracts – Reserves

Contracts – Reserves

RELEASE YOUR RESERVES

In the Terms tab you define how to withhold revenues from sales lines. In the Reserves tab, you schedule how to release these revenues. In the Reserve Release Schedule area, you set what percentage of the reserves to be released & in which period after the period in which the reserve was taken. The total of all periods should always add up to 100 otherwise not all reserves would ever be released; similarly, if the Reserves Release Schedule totals more 100, you will be releasing more reserves than initially taken.

The below example releases 50% of reserves in the next royalty period & the remaining 50% in the 2nd period calculated after the initial period when the reserve is made.

With the Reserve Basis field, you can specify whether the reserve is taken before or after the royalty calculation. Typically reserves are held against the royalty due – ie Post-Calculation. In rare cases, the reserve is calculated on the revenue input – Pre-Calculation. So for example where we have physical sales totalling $100, an artist royalty of 20% ($20) & a reserve of 10%. A Post-Calculation will take a reserve of $2 (= 10% of $20), whereas a Pre-Calculation would take a reserve of $10 (= 10% of $100).

If you set a Reserve in the Terms tab, but do not set a Reserve Release Schedule, your reserves will never be released. If you set a schedule after a period has been run, you will need to manually enter any outstanding Reserves due to be released as an adjustment on the Transactions tab.