Every year, businesses analyze company-wide performance reviews and evaluate the financial, operational, and organizational aspects of the past year.

This could be an annual event for most companies in different industries, but for brand licensing companies, it requires more than annual performance overviews and growth analysis to move forward.

It becomes essential to monitor performance closely and consistently throughout the year. Taking a proactive approach to your licensing program allows you to understand your current status with all licensees and compare information to past reports to analyze growth and decline patterns – and make appropriate adjustments before it’s too late.

When it comes to licensing, it pays to stay on top of all  your licensees’ obligations, payments, receipts, and royalties, along with your growing volume of approvals. Without reliable processes, it can be a bit tricky to manually dig through and find the exact metrics that truly matter when you are flooded with inbox emails and errant spreadsheets.

In this article, we will go over:

• Reasons and benefits to increase reporting frequency and how to efficiently measure important performance metrics continuously.
• How licensors and licensees can track individual product sales through retail channels.
• Why automation tools a can be used to catch missed payments.
• How a licensing management solution can help you to control your licensed product activities, predict and grow your revenues, and increase cash flows.

Let’s dive in.

Increase Reporting Frequency

With today’s trying times, you need to 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 fairly 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 without putting an extra burden on the royalty department to process a larger volume of statements.

Now, the number of transactions triples when you go from a quarterly to monthly schedule – which could seem quite overwhelming. That’s an area where upgraded brand licensing software can help catalog and confirm thorough reporting processes to help licensors and agents handle a myriad of royalty statements –  validate each sales transaction.

The benefits of more frequent royalty reporting far outweigh the extra burden in time and money. With the right application module, such as royalty management software, you can manage royalty tracking and generate reports to overview licensees’ performance.

Discover Where You’re Selling

Licensees bring licensed products to market through a vast array of retailers, distributors, and outlets.  they  work with most major retail and wholesale partners using advanced electronic data interchange (EDI), which allows them to delve deeper into sales results to determine what is selling at each individual retailer and replenish inventory to locations which are moving your product.

You may be missing this major leap in inventory distribution, tracking only category and article sales as a whole. By looking at sales information by individual retailer, licensors can gain several important benefits.

When you know where your licensees are selling, you can help them collectively represent your brand to major retailers.

For example, all your licensees that sell to Target can be featured jointly on an end cap. 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.

Finding Out What’s Selling

It is also beneficial for licensors to look at their business at the SKU level, 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.

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 immediately determine whether that SKU is on the master list or whether it is unauthorized.

Plus, monitoring your business on an SKU level helps you make more 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.

As Neena Gordon of N Gordon Company puts it:

“Having the ability to quickly identify unapproved products is a must in today’s market for any licensing organization. We have seen a dramatic increase in audit claims for unauthorized products over the past few years, often representing a significant percentage of the overall audit findings. Licensors are becoming much more aware of the need to actively monitor licensees’ use of properties and trademarks.”

Make brand compliance easier with our system’s built-in compliance tool designed to monitor sales at retailer, territory, and channel levels for each category of licensed products sold, then look at the date to see where exactly sales are peeking. Our brand licensing software will ensure licensees are compliant with contract terms, run reports to see SKU level data, alert you of unapproved product sales, and uncover unreported revenue.

Catch Up on Late Payments

Brand Owners have smartly tied approvals of new products to paid invoices. In short, if licensees are in arrears on payments, licensors can shut off the product approval process for future products, a step that will get licensees’ attention. This is an easy way for you, as a licensor, to help bring to light overdue receivables. Using your product or advertising approvals as a checkpoint to ensure licensees are paying in a timely manner will heighten your insight into your partners’ financial status. Moreover, it will help clear up any misunderstandings.

Reminders for Timely Reporting

Have you ever considered reminding licensees before their guarantees are due or royalty statements are required?

Each period, you can send structured emails noting licensees’ past payments and reported sales per contract to remind them of their obligations.

One of the biggest advantages of setting up such a reminder system is that you can spot misinterpretations or potential liability issues in advance, rather than waiting for your next audit.

For more frequent reminders, email notifications provide a good opportunity to note changes in staff, addresses, manufacturers and other details, helping you update your databases and communicate with licensees in addition to ensuring timely reporting.

Email notifications can be directly tracked in your database, so you centralize communications with agents and licensees.

For more regular period reminders, you can setup strategic email notifications to send out messages on a set schedule. You can create personalized messages for each licensee and have them sent out at the appropriate time, for example, remind a licensee to send proof of product liability insurance a year from now.

Key Takeaways

• In order to effectively manage multiple licensees and ensure profitability, you must adopt a proactive approach to licensing.
• It is best to look at all financial reports on a fairly frequent basis – such as monthly or quarterly. Using an integrated licensing software solution will make the process of generating instant reports much easier.
• Be sure to closely monitor which retail channels are generating the most sales and track individual retailers’ success.
• Keep detailed logs of SKUs to track each item’s sale and protect from counterfeit sales.
• Avoid the hassle of tracking down licensees for unpaid invoices or undelivered information by using automated tools to send out reminders for payments and report due dates.

In order for any licensing agreement to be financially successful, all parties must have visibility of the relevant information on every single sale and retail channel. It is often best for brand licensing companies to take a more proactive approach – particularly in the beginning stages – to guide licensees and help them make better strategic decisions.

This type of approach can give licensors a bit more control over sales and retail strategies. Furthermore, using automated systems can take the manual hassle out of gathering, analyzing, and reporting information – and even keep licensees in line by alerting them of important upcoming dates.

If you are interested in learning more about brand licensing software, give our team at Dependable Solutions a call at +1 877-289-8431, +1 424 213 6663 and +44 203 882 3370 (UK) or email us at sales@dependablesolutions.com. We would be happy to answer any questions you have and see how our solutions can help your business.