A question nobody can answer in the meeting
At acquisitions, someone asks how the author's last book did. Did it earn out? The answer is 'I think so, I'd have to check the royalty workbook'. Checking means opening last season's statement, finding the carried forward balance, and estimating sales since then from the distributor's latest report.
The same question comes up when an agent proposes a new advance, when you consider a paperback reissue, and when the accountant asks at year end about advances that are unlikely to be recovered. Each time, the answer is reconstructed by hand.
Why the position is invisible between statements
The earn-out position is a by-product of the royalty run. Between runs, sales keep arriving in distributor and platform reports, but they are not turned into royalty earnings until the next statement. The figure exists only on the day statements are produced.
- Advances are paid in instalments, so the total advanced changes during a contract.
- Some contracts are joint accounted across books, which changes the earn-out sum.
- Sub-rights income may count towards the advance under the contract.
- Reserves against returns hold back part of the earnings.
- Sales data arrives monthly, royalty runs twice a year.
Making decisions without the figure
| Decision | Risk without an earn-out view |
|---|---|
| Offering on an author's next book | An advance is set with no view of the last one |
| Reissue or new edition | Money spent on a title still well short of its advance |
| Year-end accounts | Unrecoverable advances are found late |
| Marketing spend on backlist | Effort goes to titles that cannot earn out either way |
| Author conversations | You cannot tell an author where they stand |
How an unearned advance is treated in your accounts is a question for your accountant. What we can give you is an up-to-date figure to take to them.
Our method: earnings against advance, updated monthly
- Advances by contract, taken from your contracts or advance tracker, with instalments paid to date.
- Sales imported monthly from your distributor and ebook and audio reports, using the same title map as your royalty run.
- An indicative royalty calculation between statements, using the same rates, clearly marked as provisional.
- Rules you set for joint accounting and for which income counts towards the advance, per contract.
- A dashboard listing each contract with advance paid, earned to date, balance, and the trend in recent months.
- An export for your accountant at year end showing balances and the calculation behind each.
The official position still comes from the royalty statement. The dashboard is a running estimate, labelled as one, so nobody confuses the two.
What the publisher sees on an ordinary Tuesday
You open one screen and see which books have earned out this year, which are within reach, and which are carrying a large unearned balance with flat sales. When an agent sends a proposal, the author's history is there. When you plan the backlist promotions, you can choose titles where extra sales change something for the author and for you.
At royalty time the provisional figure is replaced by the statement figure, and the difference, usually small, is visible.
Take a typical case. A debut novel was bought with a modest advance paid in three parts, the paperback came out last spring, and the hardback returns are still trickling back from bookshops. On the dashboard you see the advance paid so far, royalties earned on each format since publication, a returns reserve holding part of that back, and a line showing monthly earnings flattening after the paperback launch. That is enough to have an informed conversation with the agent about the second book, without anyone opening the royalty workbook.
You probably need this if
- Nobody can say without digging whether an author's last book earned out.
- Advances for new contracts are set without reference to past earnings.
- Your accountant asks about unrecovered advances and it takes days to answer.
- Joint accounted contracts are tracked in someone's notes.
- You only see backlist performance when royalty statements go out.