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ℹ️ The ever-growing IC Knowledge Base is chock full of useful stuff. This week we’re answering the FARQ (frequently asked royalty question)…

Why are my expenses being split?! I need them recouped in full!

Did you recently add an expense, only to be shocked that it appears as though the payee balance isn’t reflecting it in full?

Fear not! As long as the income is also being split at the same % (the default in IC), your expenses will be recouped in full before any royalties are paid out. 

It’s true that expenses get split via the net, such that a statement that only has expenses looks like this:

$0 income 
-$100 expenses 
= -$100 net 
50% split 
= -$50 payee share/balance

This where folks sometimes get confused: why is the payee balance -$50, when you’ve spent $100? 

The answer is that in Net Profit accounting, the income is also getting split, typically at the same %.

This means that an equivalent amount of income is required for any royalties to be owed to payees. For example, here’s the same income amount added to the above -$50 payee balance:

$100 income 
$0 expenses 
= $100 net 
50% split 
= $50 payee share 
-$50 previous balance 
= $0 payee balance 

Boom, recouped in full!

To repeat: as long as income and expenses are being split at the same %, the catalog always recoups the expenses in full prior to any royalties being owed!

(Link to doc)