What is Recoupment?

Recoupment is the accounting mechanism by which an Organization recovers Expenses it has paid on behalf of a Rights-Holder by deducting those amounts from future Royalties owed to that Rights-Holder.

Typical recoupable Expenses include Advances, production costs, marketing costs, tour support, or any other contractual cost agreed as recoupable.

In Reprtoir, Recoupment is handled automatically through live accounting balances linked to Contracts.

How Recoupment Works in Reprtoir

Recoupment in Reprtoir is contract-driven.

Each Money Out Contract maintains its own accounting balance that continuously offsets:

• Royalties generated by Incomes
• Recoupable Expenses attached to the Contract

As long as the Expense balance is not fully recouped, Royalties generated under that Contract are retained by the Organization.

Once the balance reaches zero, Royalties become payable to the Rights-Holder according to the Contract terms.

This mechanism is fully automated and does not require manual intervention.

Contract-Level Recoupment (Default Behavior)

By default, Recoupment operates at the individual Contract level.

This means:

• Expenses linked to a specific Money Out Contract are recouped only from Royalties generated under that same Contract
• Each Contract maintains its own independent balance
• Royalties from other Contracts are not affected

This is the standard and safest recoupment model.

Cross-Collateralization

Some agreements allow the Organization to recoup Expenses across multiple Contracts instead of restricting Recoupment to a single Contract.

This mechanism is called Cross-Collateralization.

Cross-Collateralization allows:

• Outstanding Expense balances from one Contract to be recouped using Royalties generated by other Contracts
• A consolidated recoupment balance across a defined group of Contracts
• Flexible recovery of Advances or high upfront investments

In Reprtoir, Cross-Collateralization is implemented by creating Cross-Collateralization Groups, which explicitly define which Contracts participate in shared Recoupment.

Cross-Collateralization Groups

A Cross-Collateralization Group is not a Contract.

It is a logical grouping of existing Money Out Contracts that share a common Recoupment balance.

Within a Cross-Collateralization Group:

• Expenses and Royalties are pooled for recoupment purposes
• Minimum payout rules can be defined at group level
• Individual Contract minimum payouts are overridden by the group settings

Cross-Collateralization Groups must always reflect a real contractual clause and should be used cautiously.

Accounting Impact

Recoupment directly affects accounting and payments:

• Royalties generated by Incomes are first applied to recoup outstanding Expenses
• Accounting Operations reflect retained and payable amounts
• Contract Balances and Rights-Holder Balances are updated in real time
• Payments are generated only once Recoupment conditions are met

All Recoupment activity is fully traceable and auditable.

Key Principles to Remember

• Recoupment is automatic and balance-driven
• Default behavior is per Contract
• Cross-Collateralization is explicit and opt-in
• No concept of “cross contracts” exists in Reprtoir
• All Recoupment logic is grounded in real contractual agreements