NESFA Treasury Procedures – Table of ContentsLast updated 7/17/2005

NESFA Treasury Procedures: Paying Royalties

NESFA runs all royalties which are not one-time payments through royalty accounts which the the RY-name accounts in the Chart of Accounts.

When NESFA incurs a royalty expense we first put the payment into the proper royalty account and them write a check paying off the royalty account. One reason for this is so that we properly take into account any advances on royalties.

Advances on royalties

When an advance on royalties is given to an author, the check is written against the author's royalty account. When this is done, the royalty account should show the author owing NESFA the amount of the advance. (This will be dealt with when the book is published.

Royalties paid on publication

All current contracts call for royalties to be paid on printing rather than on sale. The proper procedure is to:

  1. Get the actual print run
  2. Multiply it by the royalty rate and then book cover price to get a total royalty due
  3. Enter this amount as a credit to the author's royalty account RY-author, and a debit to the book's production account AS-Booknn. (We have a description of this process.)
  4. After posting the above transaction, get the balance due the author in the royalty account and write a check.
  5. Send the check along with an explanation of how we arrived at the amount to the author.
  6. Record the check written as being against the royalty account
  7. At this point, the amount of royalties should have been added to the AS-Booknn account and the author's royalty account should be zero.

Royalties paid on sale of book

Some old contracts still call for royalties to be paid on each copy sold when it is sold.

  1. At the end of each fiscal year, get total sales for each book and enter them into the treasurer's royalty spreadsheet.
  2. The spreadsheet will list the amounts to be entered. Typically, a royalty due will show us as a credit to an author's royalty account and a debit to the books' Sales Expense (SE) account.
  3. Once all royalties are entered, write checks for the balance in the author's royalty account.