Revenue Sharing and Partner Settlement definition:
- Partner Agreement
- Partner Contract Lifecycle Management
- Partner Revenue linked to Customer Invoice
- Partner Credit Billing and Invoicing (Settlement)
- Cash Flow Optimization and Credit Risk Shring
Revenue Sharing and Partner Settlement functions:
- Needs the master data object Partner Agreement.
- Supports the partner contract lifecycle management.
- Connects the partner revenue sharing with customer invoices.
- Uses convergent invoicing for billing and invoicing of partner credits.
- Optimizes cash flow around payments and the sharing of credit risk.
Revenue Sharing and Partner Settlement can be described by some business examples:
- The radio company pays royalty fees to GEMA for playing songs.
- The cloud service company pays software license to the software company.
- The railway company pays for usage of foreign railway infrastructure in overland travels.
The example shows the process flow of revenue sharing and partner settlement.
The partner agreement defines, that the partner receives:
- a revenue share of 75% for music flat rate.
- a revenue share of 90% for downloads per movie.
The music flat rate is 15.99€ and three movies at different amounts were downloaded.
The revenue sharing function of convergent invoicing calculates the partner credit charge for each partial amount (movie downloads and music flat rate) and generates partner-related billable items (partner BIT) with the calculated credit amount.
The partner settlement function of convergent invoicing generates the partner invoice based on the billed partner BIT and posts the calculated credit amount to the partner liability account.
The customer receives a debit memo invoice as usual and the partner a credit memo invoice.
Based on the information from invoicing, the posting of receivables to the customer and payables to the partner is made in contract accounting.