How to Create Expenses

If there are any expenses that you wish to recoup from your artist's royalties, you can add these expenses to Habitat Financial as an Expense.

You can either create an Expense individually via the user interface, or you can create Expenses in bulk by importing them using an Expense template. We'll discuss both below.

Creating an Expense via the Dashboard

To get started, go to the Expenses section on the Home Dashboard and hit the Create Expense button on the top right of your Expenses page. Here you will be relocated to

Expense Type – List what type of expense it is qualified under whether that be an advance, marketing spend, artwork, etc.
Total Amount – Specify the original Expense amount.
Recoup Percentage – This is the percentage of the Expense that you expect to be recouped from the payees.
Vendor – This is the source of the Expense, or the people or companies that you paid.
Date – This is the date that you issue the Expenses.
Reporting Period – This is the period of which you are filing your Expenses.
What type of earnings do you want to recoup this expense from? – Specify why types of revenue you want this Expense to be recouped from. You can map your Expense directly to Total Payee Earnings, Recording Earnings, Composition Earnings, or Merchandise Earnings.
How do you want to recoup this expense from the earnings? – Specify how you’d like to recoup the expenses.

Recoup Types Explained

Total Payee <Type> Earnings - Recoups the expense from the total value of the selected earnings type selected for any payees added.

Users can choose the percentage of the expense that each added payee is responsible for, or the user can add products which will automatically be attributed to payees based on the number of products added and the payee shares of the deals that the products are associated with.

For example, if Product X has one payee (Payee A) and Product Y has two payees (Payee A & Payee B) both with 50% of the artist side of the deal share, when both Product X and Product Y are added to the expense, Payee A will be responsible for 75% of the expense, while Payee B will be responsible for 25% of the expense.

Proportional to Earnings - Recoups the expense from any deal shares selected in a manner that is proportional to their earnings and with no regard to the proportions of the deals.

For example, if Deal X has one payee (Payee A) and Deal Y has two payees (Payee A & Payee B), users could add Payee A’s share of Deal X, or they could add Payee A’s share of both Deal X and Deal Y, or they could add Payee A’s share of Deal X and Payee B’s share of Deal Y.

Expenses are then set to recoup as quickly as possible in proportion to the earnings associated with the assigned deal share. That means that if Deal X is consistently earning, while Deal Y flops, the expense will recoup almost entirely from Deal B.

Proportional to Deals - Recoups the expense from any deal shares selected in a manner that is proportional to the deal shares selected with no regard to the proportions of the earnings.

Unlike the Proportional to Earnings option, Proportional to Deals is set up to automatically split the deal based on the percentages of each deal share added. For example, if Deal X has one payee (Payee A) who controls 90% of Deal X’s artist share, and Deal Y has one payee (Payee B) who controls 10% of Deal Y’s artist share, then when both shares are added to an expense, 90% of the expense would recoup from Payee A’s share of Deal X and 10% of the expense would recoup from Payee B’s share of Deal Y.

The expense will only be fully recouped when both deal shares recoup their designated expense percentage.

Fixed Amounts For Each Deal Share - Recoups manually assigned amounts from any deal shares selected.

For example, if Deal X has one payee (Payee A) and Deal Y has two payees (Payee A & Payee B), users could add Payee A’s share of Deal X, or they could add Payee A’s share of both Deal X and Deal Y, or they could add Payee X’s share of Deal A and Payee Y’s share of Deal B.

For each deal share added, the user will be asked to specify exactly how much of the expense should be recouped from said deal share. For example, if Deal X has two payees (Payee A & Payee B), the user would add Payee A, then specify that Payee A is responsible for $10 of the expense.

Creating an Expense via Bulk Import:

After clicking on the "Expenses" text on the Home dashboard, you should be welcomed by a "Bulk Upload Expenses" button to the top right of the page.

Afterwards, click on the black text "Download Template" black at the top of the screen to access the template that Habitat uses to process expenses.

Linking Expense to Payee:

After you’ve uploaded your bulk expense spreadsheet, you’ll need to link your expense to a payee(s). To do this, select an expense by clicking into it, and select the “Add Payee to Expense” at the bottom of the screen. After clicking on the drop-down menu, select the payee from which you want to recoup the expense from and choose the percentage of the expense that the payee receives. (If you’ve chosen a different Recoup Type, there may be different details in this section).

Next: Bulk Importing