Tag: budgeting

If you haven’t taken the quiz, give it a try: [link here]. If you have, here are the answers with a bit of explanation to ensure further understanding:

Q1 – The financiers want re-payment of their development advances on first day of principal photography.

It’s a Cash Flow issue. Well in advance of the start of principal photography you’ll know which costs are due payable on first day of the shoot. Those costs include repayment of development advances as well as production payment to the writer.

Q2 – The camera package chosen costs more than expected.

It’s a Budget issue. You’ll look for other lines of the budget to reduce costs in order to balance out this cost overage.

Q3 – Something happened during production and there’s an insurance claim where production has to shoot an additional day.

It’s a Cash Flow issue. Yes, production will have to pay an insurance deductible cost (which you’ll pay for out of budgeted Contingency), but the cost of the extra production day will end up being covered by insurance. You’ll just have to cash flow the costs – which is enough of a challenge.

Q4 – During production you discover you need an additional driver for production to work efficiently.

It’s a Budget issue. Like for the camera package note above, you’ll look for other lines of the budget to reduce costs in order to balance out this cost overage.

Q5 – Part of the crew’s fee is deferrals.

It’s a Cash Flow issue. The deferral amounts are paid out of Production Revenue after production is completed, so in the cash flow, these costs are coded as ‘payable’ in the last possible time period and match the deferral amount in the financing plan… so are not actually paid during production at all. The portion of the crew’s fee that’s paid in cash is payable on the weeks they work throughout the shoot.

Q6 – The performer’s union wants a monetary bond at start of principal photography.

It’s a Cash Flow issue. You’ll have to pay the bond at start of production (it’s money the union holds on to in order to ensure you pay the cast) but you’ll receive it back in wrap.

How did you do on the quiz? Knowing if your particular challenge is a budget or cash flow issue will let you address it wisely, for example: by managing the timing of costs or using an interim loan (for cash flow) or by reducing the cost or reallocating costs (for budget).

Cheers & a good shoot to you,
Deb

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“Film Production Management 101” (now in its third edition) is updated for today’s respectful workplace and sustainable practices – available worldwide, including Amazon-USA, Indigo-Canada and many other bookstores or directly from the publisher (MWP).

“Write! Shoot! Edit!” (written for young adults) is a choose-your-own-path book where you can follow the path of the writer, director-DP or editor to make your first films. It’s also available worldwide, including Amazon-USA, Indigo-Canada (Kobo), or directly from the publisher (MWP).

As PM, you may find yourself saying “Production doesn’t have the money” a lot – even if the production is fully-financed. But if production is fully-financed and there’s an allocation in the budget for the cost, you probably do have the money. Instead, production may not have the money *yet*.

Financiers release their investments on certain drawdowns throughout the life of a project, some of them as late as delivery or later; however, you are spending production’s money long before that. Managing funds in and costs out is Cash Flow.

Principal photography is the most expensive time of production. You can arrange for an interim loan from bank (to advance you on drawdowns from bankable financiers). You want minimize this loan because you’ll end up spending production money on bank interest instead of “on-screen” production costs. On the other hand, if you spend too little production money (because of cash flow challenges) and end up under-budget at end, you’ll have to give back some of the financiers investment – another thing you won’t want to do.

So… you need to know the difference between a budget challenge (“production may not have sufficient the money”) versus a cash flow challenge (“the timing of the cost could be an issue”). Here’s a little quiz to help you identify between the two of them:

Q1 – The financiers want re-payment of their development advances on first day of principal photography.

Q2 – The camera package chosen costs more than expected.

Q3 – Something happened during production and there’s an insurance claim where production has to shoot an additional day.

Q4 – During production you discover you need an additional driver for production to work efficiently.

Q5 – Part of the crew’s fee is deferrals.

Q6 – The performer’s union wants a monetary bond at start of principal photography.

How confident are you now in knowing what your monetary issue is? Answers are coming in the next post.

Cheers & a good shoot to you,
Deb

=====================

“Film Production Management 101” (now in its third edition) is updated for today’s respectful workplace and sustainable practices – available worldwide, including Amazon-USA, Indigo-Canada and many other bookstores or directly from the publisher (MWP).

“Write! Shoot! Edit!” (written for young adults) is a choose-your-own-path book where you can follow the path of the writer, director-DP or editor to make your first films. It’s also available worldwide, including Amazon-USA, Indigo-Canada (Kobo), or directly from the publisher (MWP).