Written by Kevin Plummer
I’ve been doing cash flows on productions for over 30 years now and I gotta admit they are a tedious beast. Not hard just tedious. In this blog I’ll cover all the tips and tricks I’ve learned of the years to speed it up but there is no magic button.
If you used Excel to create the budget, the process may be a bit easier. The first steps I’ll be covering is for those using budgeting software.
Step 1 – Export your budget to the account level as a tab delimited file. This will save many hours manually typing in all the details.
Step 2 – Open the file in Excel. Let’s add 3 columns – Total, variance and CTD. Let’s add 5 rows at the top. We want the week ending, Period and week#. Add a sum formula to sum from CTD column to the last week on the cash flow. Variance should be Budget column less Total column. This will show us if we have not distributed enough across the column for a particular row.
Step 3 – Add rows in for any non-budget cash items like deposits, VAT/GST etc. Add in total row at the bottom as well as a cumulative and Funds rows. This will show you if the scheduled funding will be enough to cover all the outgoing payments each week.
Step 4 – The fun part. Looking at your budget and your contracts you now need to enter what payments are due in which week. Don’t panic when you first start – ATL is tedious going through all the contracts. You may also have cast members not cast yet. For any deals not done, always refer to the Producer and Production Manager of expected deal. You could have a deal which needs to be paid into escrow so you need to cash flow the entire fee in 1 week rather than weekly or per their contract.
Things speed up once you get past ATL. For labour it’s a case of copying their rate over the specified time. If their account also includes overtime then include this as well – our total line must equal the budget for every line. The budget normally specifies if the overtime is just for shoot or also covers some prep and wrap as well.
Some labour accounts you may have multiple crew all with different prep, wrap and rates! It’s usually quicker to break them out 1 by 1 and then sum up the totals and paste\values into the line. If you don’t do this and it doesn’t balance, it’s much harder to find the problem.
Once you get into equipment hires, consult the producer and production manager again. They sometimes agree to an upfront payment to get a bigger discount. You need to cash flow accordingly.
Construction can be very tricky and changes from project to project. How they build can depend on the schedule and scenes can be cut. A lot of times sets haven’t even been designed yet and many weeks of prep can be consumed just getting ready. Talking to the construction manager and art director and getting at least a rough schedule of when their crew will start and how much in materials will be ordered each week is essential. If they are ordering on account this makes managing cash flow a lot easier if you need to hold onto a payment.
Costume – meet with the costume supervisor and get them to give you an idea of when and how much they expect to spend. A lot of their budget will be spent before the shoot even starts but can depend on type of project (period) and if they have large cast, stunts or extras. Watch out, they tend to return a lot of stuff so they might spend more in cash than their budget until they start doing returns.
Props & Set dressing: Meet with the art director and set decorator/props master. They will have a pretty good idea how/when they will spend their budget. If it is a period project or they are hiring a lot of things you need to factor in deposits. There always seems to be a lot of loss and damage when they return the items. Also if they are purchasing items and factoring in a resale, always be cautious of their expected enthusiasm. Depending on the item, work on a 40 or 50% resale. Even if they have a guaranteed sale, until you have the money in the production back account it’s not guaranteed.
Travel and Transport: Because a lot of this is booked through a travel company it helps with managing your cash flow. When to cash flow is usually dependant on the schedule if there are a few days or weeks scheduled on location. Meet with the UPM and travel co-ordinator. Find out of they will be paying for any accommodation upfront or paying deposits to hold accommodation and when.
Post Production: Meet with the post supervisor and UPM. Check if there are any post facility deals and what are the payment terms. If VFX contracts are still being negotiated find out what the payment schedule is likely to be. There are normally upfront payments required.
Consumables: In general expect a buyup at the start during prep and then a slow burn (if they are sticking to budget) during the shoot.
Fuel & Phone reimbursement: Always expect a bump at the end as crew put in all their receipts just before they finish.
The production cash flow is generally a very detailed document. Usually you will have another sheet as a summary and this may summarised further into months.
It will take a good day or two to do a cash flow and even longer on bigger projects involving multiple currencies.
You may also be asked for a monthly, 3 month cash flow. Your weekly cash drawdowns need to stay within these limits. This is a normally from a studio where treasury is also managing their cash flow across corporate and many other productions. They don’t take too kindly if you need to spend over your forecast or have too much money sitting in your back account – it’s a balancing act where schedules can change daily. You are also expected to keep pretty cash to your monthly forecasts as you revise every month for the next 3 months. That’s why you need to keep in constant contact with every department so you know if items are changing.
