A critical challenge for many companies in 2009 was to stay on top of licensees' obligations, payments, receipts and royalties, along with growing volume of approvals. Read this document to learn about simple processes you can put in place to help control your licensed product activities, predict and grow your revenues, and increase cash flows.
Proactive Licensing Simple Steps For Strengthening Your Business By Better Managing Your Licensing Portfolio. By Marty Malysz, Dependable Solutions, Inc. Many companies saw their performance slide in 2009. As you enter 2010, how about making a formal new year's resolution to reverse these fortunes and set yourself back on a path toward growth? A critical step is to stay on top of all of your licensees' obligations, payments, receipts, and royalties, along with your growing volume of approvals. Here are some simple processes you can put in place to help control your licensed product activities, predict and grow your revenues, and increase cash flows. Increase Reporting Frequency With today's trying times, you gain new insight into how well your licensees are weathering the economic storm. Typically, contracts are set up on a quarterly or semi-annual basis, with grace periods of 30 to 90 days each period, so your glimpses into the financial standing of your partners are infrequent and limited. You can change this by shortening your royalty or sales reporting period-from quarterly to monthly, for example-giving you additional views into your partners' business volume and roster of retailers or distributors. This step gives you more power to judge the credit-worthiness of your licensees and their clients and a better gauge of business seasonality. Requiring more frequent royalty payment cycles helps you improve your cash flow but does not have to put an extra burden on the royalty department to process a larger volume of statements. While the number of transactions triples when you go from a quarterly to monthly schedule, there are automation tools available to help licensors and agents handle royalty statements and licensees validate sales transactions. The benefits of more frequent royalty reporting far outweigh the extra burden in time and money. Discover Where You're Selling Licensees bring licensed products to market through a vast array of retailers, distributors and outlets. For the past decade, they have been working with most major retail and wholesale partners using advanced electronic data interchange (EDI), which allows them to delve deeper into sales results and determine what is selling at each individual retailer. Many licensors have ignored this major leap in inventory distribution, however, tracking only category and article sales as a whole. By looking at sales information by individual retailer, licensors can gain important benefits. When you know where your licensees are selling, you can help them collectively represent your brand to major retailers; all your licensees that sell to JCPenney can be featured jointly on an end cap, for example. Demonstrating sell-through across multiple categories and articles helps all licensed manufacturers secure additional shelf space and helps the licensor better position the brand in-store. It should be noted that many licensors face initial resistance from licensees when they ask them to report sales by retailer. But if your brand is an important factor in their licensed product strategy, you should be able to convince them of the value of this extra demand. Finding Out What's Selling It also is beneficial for licensors to look at their business at the SKU levels, keeping a list of what SKUs are being produced by each licensee. Matching the SKUs being manufactured to the detailed information in the licensee's contract allows the licensor to quickly spot unapproved products at the approval stage, before they get to market. Having a list of SKUs from each licensee also helps in anti-counterfeiting enforcement efforts. If a customs agent finds a suspect item, you can Proactive Licensing Simple Steps For Strengthening Your Business By Better Managing Your Licensing Portfolio. By Marty Malysz, Dependable Solutions, Inc. immediately determine whether that SKU is on the master list or whether it is unauthorized. Finally, monitoring your business on a SKU level helps you make informed business decisions based on detailed data about what specific items are selling. Any of these areas can help pay for the additional process of checking the more detailed sales information in each reporting period. "Having the ability to quickly identify unapproved products is a must in today's market for any licensing organization," says Neena Gordon of N Gordon Company. "We have seen a dramatic increase in audit claims for unauthorized products over the ... [download for more]
