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Manual System Nightmares
Dangerous information blind
spots constantly challenge intellectual property managers that rely on
manual or semi-manual decision support systems. Prodigious human
efforts are undertaken to answer repetitive questions quickly and precisely.
Staff scrambles to organize rushed period closings (laboriously reproduced
each month, quarter or year without end). These are the tragedies of
professional life without appropriate tools.
Irreconcilable Differences
Three vital functions represent the high watermark of
strenuous effort versus minimal return in a manual environment: Contract
Revisions, Cash-basis Revenues and Participations Payable.
Generic ERP General Ledger, Accounts Payable,
Accounts Receivable and Order Processing are useless in supporting these
functions. Their fundamental design presumes one-way data flows
that are reversed through manual adjustment procedures.
Within general purpose accounting systems, the exotic
dynamics of contract renegotiations, amendments, corrections and extensions
require a steady stream of carefully conceived and
brilliantly coordinated individual adjustments to general ledger accounts,
receivables balances, corporate calendars and an endless variety of
supporting spreadsheets. Tremendous communications and
cross-tabulation workloads are generated. Tireless efforts at transaction
verification and calculation validation attempt to prevent error replication
and out of balance conditions.
Conflicting Priorities
Contract Accounting is responsible for
satisfying three distinct client groups: external business partners,
internal decision makers and public accountants.
Differing requirements among these constituencies often lead to maintenance
of scores of overlapping databases and documents. Customers
expect invoices and statements that correspond with governing agreements.
Management desires reports that slice across invoices and contracts to pull
together global views by asset, territory or right. Auditors demand
intelligible transactions.
Recognizing that neither customers nor managers can be
satisfied through standard ERP reporting, accountants concentrate on
manipulating their general ledger systems to produce corporate financial
statements of acceptable auditability. Corrections take the form of
spreadsheet-justified adjustments to record revenue
recognition, currency gain/loss, cash reapplication, credit memos, cancelled
payments and budget reorganizations.
Customer Invoices, Participant Statements, Sales
Status Reports, Cash Flow Projections, Asset Valuations, Availability
Analysis, Payment Schedules, Release Windows, Royalty Estimates, Licensee
Reporting, Expired Rights, Contingent Obligations, Delivery Notifications,
Long Form Contracts, Deal Memos, Offer Sheets, Option Reminders.
In a manual system, spreadsheets, word processing
documents and emails are the solution for all of these key functions, and
many more.
Disintegration
The price paid for this multiplicity of data sources
goes beyond marginal morale, disrespect and wasted effort to strike at the
heart of the organization, profits. While some segments of intellectual
property are “hit” driven, others are low margin businesses that must wring
every last bit of sales revenue and administrative overhead out of their
operation in order to survive. Owners and agents of asset libraries of all
types know that a consistent 10 percent increase in
net profits justifies a substantial investment in systems
infrastructure.
These profits come from
eliminating missed licensing windows, unbilled guarantees,
under-calculated royalties, receivables write-downs, overlooked license
renewals, unapproved promotions, inconsistent granted rights, duplicate
contract administration, untracked contract revisions, redundant materials
requests and undervalued assets. Organizations with relatively
modest licensing revenues can easily justify a system investment to avoid
these ills. The alternative is a steady deterioration in performance as
unobserved cash leaks take their toll.
ERP Integration
General Ledger Transactions
System 7 operates as a revenue and receivables sub-ledger to the
corporation’s accounting system. It calculates the net financial effects of
various contract-driven business activities, accumulates this information as
internally managed transactions and exports journal vouchers to the parent
ERP general ledger. This data is then presented by the ERP system within
financial statements and other summarized report formats.
General Ledger Export delivers these accounts:
Deferred Contract Revenue
Unbilled Uncollected
Billed Uncollected
Billed Collected
Earned Contract Revenue
Recognized
Guarantee
Royalty
Materials
Services
Other Balance Sheet Accounts
Cash Account
Accounts Receivable
Currency Gain/Loss
System 7 maintains a rules database that enables it to automatically
build new ledger accounts during internal posting (up to 99 segments).
Individual General Ledger account segments are populated (or left null)
according the presence of relevant information within a transaction (for
example, is the contract number known?). Deliberate exclusion of available
account information that is not useful in posting to a particular account
type is a configuration option. The Cash Account is typically maintained at
a major account/company level. Greater detail (such as Asset) usually
creates additional analytical work without adding value.
Within the System 7 sub-ledger, each transaction is flagged as either
"ready" or "exported," both to automate the transaction export selection
process and to avoid inadvertent duplicate export. In the case of
operational or mechanical failure, the "exported" lockout may be
deliberately overridden to allow an export process to be reinitiated.
Exports are presented to the ERP journal voucher import facility in the form
of delimited ASCII text files.
Sample Exported Fields
| All G/L Segments |
Post Year |
Post Month |
Cash or Accrual? |
| Description |
Transaction Date |
Line Number |
Entity Code |
| Asset Code |
Contract Number |
Revision Number |
Reference Type |
| Debit Amount |
Credit Amount |
Currency |
Update Stamp |
System 7 sub-ledger accounts typically contain segments that are not
represented in the corporate ledger. Commonly "orphaned" segments include
Right, Territory, Distribution Channel, Customer, Contract, Agent and
Salesperson. These accounts are used in cash-basis revenue tracking
(discussed elsewhere in System 7 Fundamentals) to support Third Party
Participations and other cash-basis financial analysis.
About
Jaguar News
Jaguar News is published periodically for the
purpose of maintaining communications with Jaguar’s clients, prospective
clients and other parties interested in the field of
Intellectual Property
Contract Rights Management. Jaguar Consulting was founded in 1985
for the express purpose of designing, developing, installing and
supporting Intellectual Property Software
Solutions.
Clients include Alliance-Atlantis Communications,
Cinar, DIC Entertainment, Explore International, Flextech Television,
Goodtimes Video, Hallmark Entertainment, Harmony Gold, HIT Entertainment,
Jim Henson Productions, Lions Gate Entertainment, Major League Baseball,
MGM, NBA, NBC, National Geographic Society, Nelvana, Sesame Workshop,
Southern Star, Warner Home Video and WNBA.
System 7 Universal Rights Management is
Jaguar’s seventh generation software product. It is an all-new design
created specifically to bring contract rights management technology to all
forms of intellectual property, including patents,
copyrights, trademarks, trade secrets and
permissions. This groundbreaking system features a
Universal Contract Database, Multi-Level Rights Inheritance, a
fully-configurable Custom Rights Framework, and Integrated Rights
and Royalties Management. System 7 is available in
the following software modules: Intranet Portal, Contract Administration,
Rights and Restrictions, Workflow Management, Revenue Accounting, Royalties
Receivable
and Participations Payable.
Further information including
a white paper, System 7 Fundamentals, and a
test drive of System 7 Intranet is available at
http://www.jaguartc.com/system7.
Jaguar Consulting Inc.
Pasadena,
California
Lincoln Center, New York
London, United Kingdom
For additional information: Visit http://www.jaguartc.com
Or contact Jaguar at 626/796-1955 or
info@jaguartc.com
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