Closing a royalty period, step by step

Twice a year, distributor reports and contracts have to become one statement per artist. Here are ten steps, in order, so nothing gets missed: how to do each one by hand, and what Labelmate does for you when it can.

A working method, not legal or accounting advice.

A coffee, a notebook and a pen on a white table.

Before you start

The same list, in the same order, every six months

Closing a period means turning what your distributors paid into one statement per artist. Each step rests on the one before: a missing report makes a total wrong, and a wrong total makes every statement that depends on it wrong.

We grouped the ten steps into three stages: gather and check the figures, apply the contracts, then issue, pay and archive. For each one, here is how to do it by hand, and what Labelmate does when it can take it on. Before you start, have these to hand.

The list of your artists, with their contracts and amendments
Access to the label's mailbox and to your distributors' portals
Last period's statements, so you start from the right balances

Yellow and pink folders and a pen on a wooden table.

Stage one

Gather and check the figures

Before any calculation, make sure you have every report, and that each one is right.

1
Set the period
Write down the start and end dates, for example January to June. Check that the previous period is closed: what was then left to recoup on each advance, the balance, is your starting point. Your contract may also say what counts in the period, sales made or money received. In Labelmate, the engine carries balances from one period to the next by itself.
2
Gather every distributor report
A distributor report is the file that says what each track earned, by platform, country and month. Search your email and each distributor's portal for every report covering the period, and keep them exactly as they are. A distributor that sends one report a month should have sent six. Labelmate spots reports that arrive in your mailbox and offers to import them, or you drop the file in yourself, as CSV, Excel or ZIP; during early access, we set up your distributor's format with you.
3
Check each report's total
Add up each report's rows and compare the result with the total the distributor states. The amount that counts is net receipts: what the label received, after the distributor's cut. A gap always has a cause, such as a total row counted as a sale, or a file counted twice: find it before going further. On import, Labelmate checks that the rows add up to the file's own total, and catches a file already imported.
4
Match every row to a track
Every row of a report must match a track in your catalogue, and every track an artist. The ISRC, the unique code of each recording, is the safest key. A row that matches no track can't be paid to anyone: list those rows, find out why (a new release, a remix, a misspelt title), and never drop them quietly. In Labelmate, the catalogue shows the tracks your reports mention and the artist each one belongs to.

A turntable playing, next to seven-inch singles.

Stage two

Apply the contracts and calculate

The figures are complete and right. Now apply what each contract says, then reread.

1
Reread the contracts
For each artist, reopen the contract and its amendments, and check four things: the rate, the artist's share of receipts; the advance, money paid up front and then recouped from their royalties; the costs the contract lets you recoup; and who gets paid, such as a featured artist or a producer paid in points (three points is 3%). If you turn it on, Labelmate's AI reads contracts that arrive by email and proposes the rate and the advance, quoting the exact passage; nothing is saved without your approval. A split between several payees on one contract is still checked by hand.
2
Add costs and late invoices
Recoupable costs are expenses the contract lets you recoup from the artist's royalties, like an advance. Gather their invoices, check they belong to this artist, and add them to what is left to recoup. An invoice that arrives after closing must not get lost: carry it to the next period. With the AI on, Labelmate proposes invoices received by email as recoupable costs for you to approve; an invoice dated inside a period already issued counts on the next statement, and keeps its real date.
3
Calculate, then reread every statement
For each artist, net receipts times the rate give their royalties. Take off what is left to recoup on the advance and costs; what remains is payable. If the royalties don't cover it all, nothing is payable, and what is left to recoup moves to the next period. Then reread each statement as the artist would, and compare it with the last one. In Labelmate, a tested engine does the maths, never the AI, and every figure points to the report row it came from.

An example

Rereading a statement: each figure follows from the one before

Here is one period's calculation for an imaginary artist, as a statement should let you follow it, line after line.

Step	Amount	Where it comes from
Net receipts for the period	€12,480.00	The sum of the report rows matched to this artist's tracks
Rate in the contract	18%	The contract, in its clause on pay
Royalties for the period	€2,246.40	€12,480.00 × 18%
Still to recoup on the advance	€1,500.00	The previous period's statement
Recouped this period	€1,500.00	The smaller of the two amounts above
Payable	€746.40	€2,246.40 minus €1,500.00
Left to recoup	€0.00	The advance is fully recouped

Example: an artist and amounts made up for illustration. The figures add up to the cent.

Stage three

Issue, pay, archive

The statements are right. Now freeze them, send them, pay, and file everything for later.

1
Issue the statements and lock the period
Produce one dated statement per artist, and keep a copy that will never change, a PDF for example. Don't touch this period's calculation again: if a mistake turns up later, correct it openly, for example on the next statement with the difference explained, rather than rewriting the old one. In Labelmate, issuing produces one PDF per artist and locks the period: its figures never change.
2
Send the statements, then pay
Send each artist their statement with a few lines summing up the amount and the payment date, and keep the email you sent. Then make the transfers from your bank, for the payable amount on each statement, and note their dates. How these payments are treated for tax and social charges is a matter for your accountant. Labelmate does not send statements or pay anyone: you send each PDF yourself, and the payment leaves from your bank, as it does today.
3
Archive, and keep the supporting documents
File together, by period and by artist, the reports used as received, the contract and its amendments, the invoices for recouped costs, the statement sent and proof of payment. Article L. 212-15 provides that, at the artist's request, the producer gives the supporting documents for its accounts to a chartered accountant appointed by the artist: this is the file you will need. In Labelmate, every issued statement is archived as PDF/A, a format designed for long-term preservation, with its fingerprint (a code computed from the statement's data) and that data attached; a report used by an issued statement stays in place.

Questions

Does an artist with nothing to receive still get a statement?

Article L. 212-15 makes no exception for a period with no payment, for instance while an advance is still being recouped. A zero statement is useful anyway: it shows the artist what they earned and where their advance stands.

A report arrives after the period ends: what now?

Your contract may say whether you count sales made during the period or money received during it. Apply its rule every period, so that no report is counted twice or forgotten.

An artist disputes a figure: where do I start?

With the report row the figure comes from, then the contract clause that sets the rate. In Labelmate, every figure points to its report row, and every value read by the AI quotes the exact passage of the contract.

Should two people close a period?

If you can, yes: one prepares, the other rereads, and a second pair of eyes sees what the first no longer does. In Labelmate, several people at the label can work, each on their own computer, on the same data, encrypted and kept in sync.

With Labelmate

Less copying, the same checks

Labelmate takes on the steps with the most copying. It spots reports, contracts and invoices in your mailbox, checks each report's total on import and, if you turn the AI on, reads your contracts and invoices, quoting the passage. A tested engine then does the maths, never the AI.

The decisions stay yours: nothing is saved without your approval, and you are the one who issues the statements, one PDF per artist with the line-by-line detail and the source reports. Sending and paying stay in your hands, from your own email and your own bank.