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Dynamics AX Updates

Dynamics AX Royalty Management Overview

Microsoft Dynamics AX Royalty Management is intended for the companies who exercise the right to use the third party’s assets and/or intellectual property and helps them better manage their royalty agreements through automation of the tasks involved in administering, tracking and making the royalty payments.

Royalty is an agreement between one party that is: the licensee, with another: the licensor.

One of the new features in MS Dynamics AX is the inclusion of the AX royalty management module. In order to comprehend the capabilities of the AX Royalty Management functionality, we will need to first understand that a royalty fee is a compensation made to a person or entity for the use of the property.

Since today’s business climate allows companies to manage and sell various products and services which are controlled by other people and entities, Dynamics AX  provides ease of conducting and tracking these complex transactions by using the royalty management feature in MS Dynamics AX.

Royalties are commonly paid to the artists, musicians or other persons or businesses who own intellectual property. Sometimes the royalties are paid upon the sale of an item and sometimes they are paid for each time the item is used. The use of someone else’s artistic or intellectual property should be negotiated in a contract before any payments are made.

Microsoft Dynamics AX  provides the functionality to manage royalty agreements, book accruals and manage payments. Royalty Agreements in Microsoft Dynamics AX can be defined based on the multiple parameters including a percentage or fixed amount that will be paid to each vendor and the rate at which the vendor will be paid.

You can use royalty agreements form to create the royalty terms and track the progress throughout the life of the royalty. Microsoft Dynamics AX allows the customers to set up a royalty contract in terms of the payments that are to be made. MS Dynamics AX calculates and post the liabilities and make the payments.

The benefits of using a royalty calculation processor include the following: Reduced manual calculation errors, visibility of the accrued royalties, and visibility of total royalties paid, on-time payments, and controlled statuses.

The Dynamics AX Royalty Management module allows for the ability to do the following:

  • Create unique broker contracts by registering the details of the negotiated agreements with vendors, customers or groups of customers
  • Pass on broker fees and charges to the customer
  • Approve and manage royalty payments
  • Automate vendor invoice posting for royalty amounts

In order to utilize the royalty module in the system, users will have to be using MS Dynamics AX. In order to view what the functionality the user’s Dynamics Axapta license provides, a user can navigate to System Administration > Setup > Licensing > License Configuration.

AX Royalty Management

Dynamics AX Royalty Management

Upon opening the license configuration menu, navigate to Trade agreements option. Expand the option and ensure Royalty is flagged. This will ensure that the royalty-related features are activated in the system

Setup:

  1. Accounts Payable Parameters – In order to use the royalty module in Dynamics AX, the user will need to set up the following information in the AP parameters (AP > Setup > Accounts payable parameters) under ‘Broker and Royalty’ menu:
    • Starting Day of the Week: Select the day of the week on which to calculate the royalties
    • Accrual Journal Name: Select the journal to post the royalty accrual amounts when the royalty is approved
    • Accrual Account: Select the account to post the interim royalty liabilities
    • Expense Account: Select the account to post the interim royalty expenses
    • Procurement Category: Select the category for the line items that include the processed royalty claims on vendor invoices
Setup options

Setup options

2. Royalty Agreements – Royalty agreements will be required to be set up to calculate and process royalties. In order to set up the royalty agreements, the user will navigate to the Accounts payable > Common > Royalties > Royalty Agreements. Inside the royalty agreements menu, the user will proceed to do the following:

  • Select New to create a new agreement
  • The user will proceed to enter the following information inside the header section of the form:
    • Vendor account – The vendor account that is specified here will receive the royalty payment.
    • Description
    • Unit
    • Unit type
    • Unit of measure royalty option
    • Calculation date
    • Start date
Royalty Agreements

Royalty Agreements

  • After the information in the header, level has been completed, the user will proceed to the bottom of the form and select the Add line.
Select Add line

Select Add line

  • After adding a new line, the user will go to the selection tab and select the product (or products) for which the royalty agreements will be made for by selecting Add.
  • An Add Products window will appear where the user will be able to select the product for which to set up a royalty agreement. Select a product and press Add. After adding all the desired products, the user will press close to close the screen

Select Product and Press add

  • After returning to the royalty agreements page, select the Royalty amounts tab and add the values for the royalty pertaining to the product specified in the Selection tab. In the example shown below, if a product is sold, the royalty percentage will be 10%.
Royalty Percentage Calculation

Royalty Percentage Calculation

  • After the values in the Royalty amounts have been specified, select the Validation on the top. After the validation occurs, a validated checkbox will be flagged. The checkbox indicates this agreement is now active.
select Validation

select Validation

Royalty in Sales Order Process

When creating the new sales order, the sales order line will have the item that was specified in the royalty agreement. Once the sales order has been completed and invoiced with the necessary information, the user can go to the Sales order line menu and select the Price details.

select Price details

select Price details

Upon selecting the price details, the user will find that 10% of $3000 unit price is the royalty amount of $300.

royalty amount

royalty amount

Processing

After a sales order is invoiced with the product listed in the royalty agreement, a royalty claim record is then created. In order to view the royalty claim record, the user will navigate to the Accounts payable > Common > Royalties > Royalty claim.

Royalty claim

Royalty claim

When a claim is ready to be processed, the user will first approve the royalty by selecting the Approve royalties.

select Approve royalties

select Approve royalties

After the approval process has completed, the user will proceed to process the royalties by selecting the Process royalties.

Process royalties

Process royalties

Once the royalties have completed processing, the vendor invoice for paying the royalty can be seen by selecting the Royalty transactions.

select Royalty transactions

select Royalty transactions

The user can now pay the royalty claim by using AP payment journal.

Royalty Claims

After invoicing a sales order, Microsoft Dynamics AX cumulates the royalty claims. The royalty amounts can be cumulated on each invoice, week, month, year, or the personalized period. In the case approval is required on royalties, the royalties can only be cumulated after approval has been given.

The Royalty claims will remain in the list view with one of the following statuses until they have been cumulated:

  • To calculate: final royalty amount is pending completion of the cumulate royalties run. This status applies to the royalty claims that are generated from weekly, monthly, or yearly agreements
  • Calculated: the claim was cumulated and is pending the approval
  • Approved: the claim had been approved and if approval is required
  • Mark: the claim is available for processing
  • Processed: claim was processed and a vendor invoice was posted

Once the royalties are cumulated and processed, the status will change to “completed” and then the vendor invoice will be posted and available for payment.

Conclusion

In this Article, we dealt with Dynamics AX Royalty Management and its setup and Functionalities along with their Importance towards Sales, order processing and Royalty Claims.

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