Licensing Management and Contract Compliance
PwC offers a variety of services to develop and implement third-party compliance programs for various types of third-party business arrangements:
- Vendor compliance
- Channel partner compliance
- Software License Compliance
- Media and advertising
- Intellectual property protection
Vendor compliance
Complex pricing structures, time-based variables or use of sensitive information can inhibit transparency in vendor relationships and pricing. As a result, companies are often left wondering they have overpaid for goods and services.
Typical issues in vendor compliance:
- Most favored pricing requirements are not upheld
- Simple lack of process or controls
- Inclusion of unallowed costs in “cost-plus” pricing structures
- Miscalculation of rebates
- Incorrect labor rate classification
How we can help
PwC’s vendor compliance professionals have executed thousands of inspections, collaborating with our clients to manage global programs across numerous industries. Our teams have significant experience assessing compliance with a number of complex contractual arrangements and assisting with recovery of costs.
Channel partner compliance
Companies increasingly rely upon channel partners (e.g., distributors, resellers, VARs) to sell products and services to end customers. The channel partner business model provides companies with limited transparency into the sales channel which can lead to lost profits, anti-bribery and corruption risks, grey market sales and revenue recognition risks.
Typical channel partner compliance issues:
- Misreporting of inventory and sales data, affecting incentive payments and channel operations
- Anti-bribery and corruption risks from public sector transactions, misused partner discounts and other program payments
- Product diversion to or sourced from unauthorized entities
- Abuse of Marketing Development Funds
How we can help
PwC’s channel compliance professionals have a deep understanding of unique challenges of maintaining control over the flow of products through the sales channel and ensuring incentive programs are properly managed to achieve desired results and do not negatively impact the bottom line or adversely affect price. Our channel compliance professionals have teamed with clients in consumer goods, technology, life sciences, industrial products and apparel to develop best-in-class compliance programs to monitor compliance and enrich partner relationships.
Software License Compliance
Software License Compliance (SLC) can help software companies recover revenue and maximize the value of their license agreements. SLC can also help companies understand what software is deployed and in use in their IT environments vs. their entitlements to minimize risk and identify cost savings opportunities.
Typical SLC issues:
- Companies deploying more software than their entitlements
- Lack of understanding of complex software licensing rules by vendor and product
- No software asset management or discovery tools to measure or monitor software usage
How we can help
PwC Software Licensing Compliance professionals have extensive experience across a number of software products and proven accelerators to help clients quantify deployment and usage and recover revenue. Our team has helped companies become more compliant, develop a deeper understanding of licensing obligations and improve related processes.
Media and advertising
Advertisers want to ensure they are getting the most out of their media and advertising investments. They often face challenges around transparency into these investments and confirming their effectiveness and efficiency. Gaining transparency into where and how your dollars are being spent in the advertising supply chain can lead to significant cost savings and more effective media strategies.
Typical media and advertising issues:
- Lack of transparency in media/advertising supply chain
- Media under-delivery/noncompliance with quality guidelines
- Vendor volume rebates/discounts and credits not passed back to advertiser
How we can help
PwC’s media and advertising assurance services is comprised of experienced professionals from audit and advertising/media backgrounds that assist marketers and monitor and optimize their marketing spend. Through investments in tools/technology, value-based and solution oriented approach, and industry thought leadership, our media and advertising assurance professionals successfully drive return on investment for our clients.
Intellectual property protection
In a licensor–licensee relationship, licensees self-report royalty-bearing sales, including deductions and exclusions. They are also often left on the “honor system” when it comes to whether they have followed contractual requirements such as minimum sales volumes, marketing activities, territory limitations, customer and channel restrictions and other provisions.
Typical IP licensing issues:
- Unreported sale / transfer of licensed products
- Unallowed deductions from royalty payments
- Late payments
- Excess markdowns or trade discounts
- Product diverted to or purchased from unauthorized territories or channels
How we can help
PwC’s royalty compliance professionals have deep experience assisting clients with examinations across various licensing platforms across most global markets and sectors.
Failing to comply with contractual obligations
All of our solutions are designed to anticipate and address the reasons partners fail to comply with contractual obligations:
- Lack of vigilance: Once executed, contracts are usually put aside and only looked at for renewals or when there’s a dispute or other triggering event
- Limited resources: Business partners don’t have the structure or systems to coordinate various disciplines within an organization to properly manage and report on compliance.
- Human error: Organizations delegate compliance-related efforts to junior resources who often have not read or don’t have access to the contracts.
- Breakdowns in process or control: Business partners are focused on their own profitability and business metrics and fail to allocate proper resources to contract compliance.
- Differing contract interpretation: Differences in business culture, unexpected circumstances, complex language and undefined terms can all lead to interpretive issues. Organizations may also interpret terms so that they are beneficial to their own goals, without considering the original intent.
The value organizations derive from third-party compliance programs can be significant and include cost/revenue recoveries, identification of cost savings, process and continuous improvements, contract development risk mitigation opportunities, and industry-leading practices.
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