Film Production Accounting

This post has been well received ever since I first posted it in 2009. I’m updating now to bring it up to 2014 standards.

There is a professional accounting niche that is little known – Film Production Accounting. I regularly receive queries to my web site, or my blog, about film production accounting and of how to enter this field. Most of the queries used to be from the Los Angeles area, but over the past 4 years there has been an equal number of queries from the Film Tax Incentive States.

FILM PRODUCTION ACCOUNTANT CATEGORIES AND EXPECTED PAY

Production accountants have traditionally fallen into the field without much of any kind of accounting background. I believe that film production is the last industry in the world to hire accountants who don’t have some kind of formal training in accounting. Currently, the field of film accounting is looking more appealing to a wide variety of CPA’s who are looking for something more markets to penetrate – or even to change careers. Most film accountants get into that position through a period of apprenticeship as assistant accountants. The levels usually go from File Clerk, 2nd Assistant Accountant, 1st Assistant Accountant to Key Production Accountant (sometimes referred to as the Production Auditor). Another position that is classified as an assistant accountant is the Payroll Accountant. The Payroll accountant is an expert in calculating complicated union payroll time sheets and is usually too busy to do much else than just that one function. A good payroll accountant can make in the area of $1800 to $2,000/week on the bigger Hollywood productions and are worth every cent.

The File Clerk would start in the range of $500-$900/Week, a 2nd Asst Accountant in the $900 – $1400/Week range, a 1st Assistant Accountant in the range of $1,500 to $2,300/Wk.  usually the accountants get a little more on a big Studio production, and less on a small independent production.

THE SKILLS OF A FILM PRODUCTION ACCOUNTANT

The Film Production Accountant needs to be conversant with every area of film production, if not downright expert when it comes to predicting cost overruns. The rapidity of spending during the production of the feature film, or TV show, is so high that it would be a nightmare for someone who hasn’t been exposed to the usual reporting system. That’s why an experienced Film Production Accountant doesn’t get out of bed for less than $2,500 a week (a 5 day week). Experienced production accountants demand and get at least $3,500/5 day week, and if they go on location ask for another $1,000 to cover off Saturdays worked (even though they don’t need to work many Saturdays).

The Film Production Accountant’s job falls into the same three categories as any other accounting function:

- Bookkeeping: the speed of bookkeeping has to be experienced to understand. Petty Cash is often in the $60,000 to $80,000 a week range.

-Reporting: there are very specific Budgeting and Weekly Cost Report formats which can be a bit of an IQ test until you get used to it. This type of report is used throughout the film production world from Australia to India to Europe to North America.

-Auditing: because the money appears to be spent so helter-skelter it can be abused, mostly by producers and department heads. It’s up to the production accountant to see the signals and prevent it before someone embarrasses themselves. There really are lists kept of those deemed to be A, B or C listed. Those that are B and C listed are almost always because of their inability to control their departmental budgets.

So, if you have an accounting background you can pick it up very quickly, but you really do need some experience first. The fact that you’re intimately dealing with so many facets of the actual film production it’s certainly a challenge and, I have to say after 30 years, tons more challenging and rewarding than working in manufacturing, banking, etc.

MY JOURNEY TO, AND IN, FILM PRODUCTION ACCOUNTING

My own background started out in Engineering in the 70’s. Then, when I graduated I saw that open pit mining wasn’t doing it for me, so I started working with an accounting firm to earn a designation. My original purpose was to become skilled enough to be able to use both Engineering and Accounting to help failing businesses turn around. However, after I got my accounting designation I discovered that I would be taking a steep cut in pay to go back to being a junior engineer so I took a job as a Chief Accountant/Controller at a place with about 15 branches. After 5 years I went out on my own, starting a small accounting practice with a couple of other people. After a couple of years of beating the bushes and working 7 days a week I saw that I could make more money as a Film Production Accountant than I could in my practice, so I dropped my office space, my 2 staff, and started working as an assistant accountant.

STEPPING STONE TO FILM PRODUCING AND PRODUCTION MANAGING

Like other industries, after spending many years accounting for and auditing the money, including advising producers and production managers, you start to get the idea that you can do as good as, or better job, at producing. There are many production accountants who have gone on to related film production careers – although, funnily enough, they often keep quiet about it. I presume because they want to distance themselves from the infamous “Blue Suit” – the much maligned Big Studio Exec. (Not a job for me – man, talk about pressure).

THE DOWNSIDE

A downside to Production Accounting is that you don’t ever have a JOB. You get CONTRACTS which last anywhere from 5 weeks to 9 months (pretty seldom longer than that). I’d say that my average contract on a film or TV production in the $20Mil to $40Mil range was about 6 or 7 months. Honestly, I really liked the fact of working with different people. I have often talked with other people in the biz, and we almost all agree that the independence that brings is worth the stress of looking for contracts. Once you’ve been in the business for 3 years, and if you haven’t messed up, you’ll be on call, especially if you’re willing to travel.

So, there’s the pros and cons to getting into the film production industry as an accountant.

HOW TO BUST IN

I spend some time talking about ways to bust in during the weekend workshop. With the advent of tighter and tighter money I see even more opportunities for film accountants as aides to producers, or even film accountants producing projects on their own. Subjects like Film Tax Incentives, verification of paperwork required during Crowdfunding of “Accredited Investors”, cash-flow schedules, familiarity with equity terms, etc can all be easily learned by film accountants, or by professional accountants and bookkeepers interested in penetrating this market. (If you are interested in how this all fits together see this short video).

Good luck in your career, whatever you choose.

For more about training as a film accountant see this link to film accounting workshops and training online.

John Gaskin

Film Accounting – Understanding Union Payroll

For anyone who has ever tried to understand how to pay a SAG Performer, take heart. Know that when you look at the full 710 pages of the SAG “Codified Basic Agreement” you really only need to understand 15 to 20 pages of that tome. This is also true to a lesser extent for the Directors Guild of America (DGA), the International Alliance of Theatrical and Stage Employees (IATSE) and the Teamsters working in film.

FILM PAYROLL RULES ARE LOCATED WITHIN EVERY “AGREEMENT”

The film unions and guilds have made “Agreements” with the Alliance of Motion Picture and Television Producers, generally known as the AMPTP. The “Agreements” state the rules of the contract between the Guild or Union and the Producer, including all payroll rules.

Each Guild/Union has broken down their rules into the following 4 categories:

  1. The “Basic Day” and Overtime Rules
  2. The penalties associated with “Rest Violations” (also called “Turnaround”).
  3. The penalties associated with violating Meal Periods (called “Meal Penalties”).
  4. The various circumstances associated with Travel – whether to a “Distant Location” (i.e. staying in a hotel), or traveling outside of a defined “Studio Zone” (also often referred to in each locale as “The Circle”).

Once you know where these points are in each of the agreements your task becomes one of familiarization and practice.

THE NECESSARY TRAINING AND PRACTICE

I’ve found that a full weekend practicing the feature film payroll rules, followed up by on-line links to all the materials, is plenty for your average person to learn how to calculate the union/guild payrolls to “gross” (i.e. to the gross amount of pay due before union and government benefits/deductions). I also supply timecard templates (yes, with the formulas) which are “helpers”

SCOPE OF THE US FILM PAYROLL WORKSHOPS:

The solution to understanding Film Guild/Union Payroll is to find a central source of contracts for SAG, DGA and IATSE then summarize the four categories of payroll rules mentioned above. Then have someone show you their version of Excel formulas which comply with these central rules. At the risk of shameless self-promotion, I have done that, one union at a time for each of:

  • SAG
  • DGA,
  • IATSE National Low Budget (any feature or TV production in North America less than $13Mil) and
  • IATSE Area Standards (any feature or TV production greater than $13Mil outside of the Los Angeles and New York zones).
  • I have a general Teamster contract for the non-LA/NY areas, but, honestly, it’s child’s play to understand after learning the above.

Actually, it is not a problem for me to say that if you understand SAG, DGA, IATSE Low Budget and IATSE Area Standards payroll rules, you can understand Film/TV payroll anywhere in America – it would only be necessary to get a copy of the local contracts in those higher production centers and you’d be ready in a day or so.

For more information see http://www.filmaccounting.com

Cheers / John

 

Film Accounting – Georgia and New York

GEORGIA GOVERNOR COMMITTED TO FILM PRODUCTION INCENTIVES

Georgia Governor, Nathan Deal, is solidly behind the film tax incentives in Georgia, according to a Georgia news release this month. “Not only has this industry created jobs and investment opportunities for Georgians, it also has revitalized communities, established new educational programs, tourism product and more,” said Deal. “I will continue my commitment to growing this industry and to developing a film-ready workforce to meet the needs of the productions that are setting up shop in Georgia.”

CREATING JOBS FOR GEORGIANS

According to the Motion Picture Association of America (MPAA), the motion picture and television industry is responsible for more than 77,900 jobs and $3.8 billion in total wages in Georgia, including indirect jobs and wages. Nearly 23,500 people are directly employed by the motion picture and television industry in Georgia, including 8,188 production-related employees. These local businesses include technology, lodging, real estate and food service.

CREATING JOBS FOR NEW YORKERS – AND OTHER STATES

Governor Cuomo has been behind New York legislation which has allocated $420 million per year for the calendar years 2015-2019. Louisiana is also booming, at least as much as Georgia. Other States with promising film production statistics are Pennsylvania, Ohio, Illinois, Alaska and New Mexico. Three other States with very good film productive incentives are Massachusetts, Florida and Alabama. Check the incentives map here for current tax incentives by State.

CROSSING OVER TO FILM ACCOUNTING

All this is creating a demand for Film Production Accountants. Film accountants generally train through a series of apprenticeships. A CPA designation is not a requirement; although having a CPA designation would definitely mean a faster rise through the ranks. How do you get your foot in the door? The biggest complaint I hear is, “The Key Accountants only want to hire experienced assistants.” So, the assistants are imported from out-of-town.

HOW DO YOU GET EXPERIENCE IF YOU CAN’T GET HIRED?

A solution is to “get up to speed” in workshops like these, learning the various film accounting techniques by practicing in a controlled environment. We use the unique proprietary film accounting software used in film production, taking the time to clear up the industry specific terms, reports and processes. (Note: this software cannot be purchased, only leased).

See http://www.filmaccounting.com for more information.

Cheers / John

 

Film Accounting – Fresh and Fun CPE

overviewFILM ACCOUNTING COURSES

A few years ago the Connecticut Film Tax Credit Administrator, Ed Ruggiero, asked me to deliver a workshop to CPA’s who were interested in performing audits of film productions for the CT State Tax Credit. I did just that, successfully helping several local CPA’s understand the Film Industry and Film Accounting much better. However, subsequent scheduling of workshops for CT CPA’s was difficult. As a result, I put together 4 online courses as a substitute to a live workshop.

LET YOUR PEERS DO THE TALKING

Online courses have an earned reputation as being rather boring, slow and sometimes downright monotonous. Most of us would rather have a live workshop during the workweek, with lots of interaction among the other attendees and the instructor. However, getting to the workshop location, and breaking away from the office, aren’t always possible – for you or for me. So, how do you evaluate which online CPE course to take? The easiest way is to check out what your peers have said about the courses.

EVALUATION OF MY ONLINE COURSES HAVE A SCORE OF 100%

At the end of each online course qualifying for CPE I ask the student if the “stated objectives of the course” were met. There has never been a “No” yet…. that’s 100% of the time every student has said that the stated objectives were met. Several students also had other good things to say.

A SAMPLE OF ADDITIONAL COMMENTS MADE BY STUDENTS

1. Film Accounting and Auditing – An Overview

  • “Yes. Great introduction of the role the production accountant will play within the overall film production life-cycle.”
  • “Yes – it was pretty much an overview. I feel I have a much better understanding of film accounting now.”
  • “Yes! Very easy to follow. An excellent intro to the industry.”

2. Film Accounting and Auditing – The Basics

  • “Yes, great to see the various sample forms. The workflow charts are also very helpful.”
  • “Yes, the detailed explanations of the various forms, as well as the general ledger software, were very helpful.”
  • “Yes, very useful. I now have a sound understanding of the basic principles of production accounting.”

3. Film Accounting and Auditing – Intermediate

  • “Yes. Great explanation of the inter-relationships between the various reports and overview of the audit plan.”
  • “Yes. Enjoyed the course and learned a great deal about auditing productions.”

For more detailed information about the online courses see http://www.filmaccounting.com/filmaccounting-cpe.htm

If you would like to see the stated objectives of the courses I have listed them below, along with links to short YouTube videos describing each of the course’s content.

Cheers,

John

- John has worked on over 50 film and television productions in 6 countries since 1985 on productions big and small. For more information on his credentials see http://www.filmaccounting.com/filmaccounting-cpe.htm

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An Overview – The Learning Objective Met By 100% of the Students: The participant will understand the overall business cycle of the Film Industry with specific attention on the workflow, general terminology and film industry specific accounting practices of Film and Television Production. No advanced preparation is required. See this short video reviewing the content of this course.

The Basics Course – The Learning Objective Met By 100% of the Students: The participant will be familiarized with the film production processes, forms and control points of a usual film production. With this knowledge the participant will be “up to speed” with the books and records of a usual film or television production.  No advanced preparation is required. See this short video reviewing the content of this course.

The Intermediate Course – The Learning Objective Met by 100% of the Students: (Prerequisite: An Overview) The participant will understand the interaction among the production entity, the approved budget, the production documents (Call Sheets, Daily Production Reports, etc) and the Final Cost Report – prepared by the film production accountant, this is the document audited for film tax credit certification. From this understanding an external auditor will be able to plan the tax credit audit with an understanding of all industry specific factors.  No advanced preparation is required. See this short video reviewing the content of this course.

The Advanced Course – The Learning Objective Met By 100% of the Students: (Prerequisites: An Overview and Intermediate)The participant will have an understanding of various State requirements to certify the production for Tax Credit purposes. From this understanding participants can confidently comply with their own particular locale’s certification requirements. The categories closely examined are Qualified Expenses (Payroll, Non-Payroll, Real Property) as well as Related Party Transactions, Ownership and Sources of Funds. No advance preparation is required. See this short video reviewing the content of this course.

It’s After Tax Season – CPE On Film Accounting – 23 Hrs

Now that tax season is over, many CPA’s are planning on the best way to fill their CPE credit requirements. If you’re tired of the same-old-topics, have a look at the largely unknown field of Film Accounting.

FILM INDUSTRY AS AN OPPORTUNITY

Within the film and television industry there are several sources of new revenue opportunities for CPA’s. The most obvious opportunity for CPA’s is to perform audits of the Production Cost Report for the State Film Tax Incentives; however, several other opportunities lurk behind those closed doors, not the least of which is actually doing the film accounting for independent film and television productions.

FILM INDUSTRY SPECIFIC PRACTICES

The best way to learn more about the film industry specific practices, terms and unique general ledger software is to come to a workshop. The workshops are hands-on film accounting activities performed with proprietary general ledger software used in the film and television industry.

FILM ACCOUNTING 101 IN MAY, 2014

The next workshop is in May, before the Memorial Day weekend, in Los Angeles. According to rave reviews, nobody leaves the workshops bored. As of Sunday, April 27th, there are 4 seats open (really) as I only take a maximum of 20.

For more information visit http://www.filmaccounting.com

Cheers,

John Gaskin

John has worked over 50 film and television productions in 6 countries over 30 years. See his resume on IMDb and check the testimonials at http://www.filmaccounting.com

 

Film Accounting – The Quandary of Breaking In

Any person who wants to break into Film Accounting as a profession has a very hard time of it. The film producers don’t budget for “training” – they want somebody to walk into the position and GO-GO-GO.

Is Film Accounting That Different?

It’s not that film accounting is particularly difficult, or even that different. It’s the same principles as other industries, like construction for instance. The big three functions of Bookkeeping, Internal Controls and Reporting are true for film accounting just as they are for other industries. The biggest difference is rooted in the film industry specific practices, terminology and film accounting software systems which are virtually unknown outside of the film production industry.

Producers and the “Key” Film Accountants Want Experienced People

Most film accountants aren’t certified accountants in any other field – although if you have experience as a bookkeeper or CPA behind you it’s a heck of a lot easier to advance. Film Production Accountants are simply smart people, not allergic to fast pace and long-ish hours, who have worked their way into that position. The apprenticeship system still works, but when more and more demand is put on film producers to produce faster, cheaper, better, there’s less and less room for an apprentice. So, how do you get experience?

How To Solve This Quandary?

The only way I know of is to train as a film assistant accountant in a workshop environment using the film accounting software systems known only within the film industry. You will be saturated with film industry specific practices and terminology, all while learning the practical aspects of the unique film accounting software generally used in film production.

Come to my next intensive workshop in Los Angeles on May 17/18, 2014. It is 23 hours of CPE.

See my website at http://www.filmaccounting.com for more details. Most of my workshops are held in Louisiana, Atlanta, Detroit and Toronto. This is only the fourth time that I’ve been back to Los Angeles in the past 4 years, so don’t miss it!

Regards to all,

John Gaskin

Veteran of over 50 film and television productions in 6 different countries. See IMDb for credits.

 

Crossing Over From the Film Budget to the Cost Report

Today, while delivering a 2 day workshop on Movie Magic Budgeting a young Producer, an active Art Director and an experienced Assistant Director all told me that they wanted to understand the workflow between the Film Budget and the Cost Report – actually, the Art Director and the AD, had never even SEEN a Cost Report.

FINANCIAL REPORT CARD

The film production’s very confidential Cost Report is the financial report card issued weekly to the Studio Exec’s, Completion Guarantors, Executive Producers, Tax Credit Auditors/CPA’s, etc. Understanding the workflows behind this document is a fundamental requirement for anyone interested in advancement within the film industry.

MANAGING FILM BUDGETS AND COST REPORTS

I have been doing a series of 6 live webinars for a few years now. It directs the attendee’s attention right to this area of Managing Film Budgets and Cost Reports, disclosing tricks of the trade which just are not available anywhere else. The attendees will review a $9Mil budget from several angles, learning the practical methods of managing a film budget, and it’s immediate cousin, the Cost Report (note that I use the Managing, as opposed to actually manipulating software).

PROFESSIONALS ACTIVE AND INTERESTED IN THE FILM INDUSTRY

The live webinars are not only addressed to professionals working in the business, but also to emerging producers, Certified Public Accountants who would like to understand more about the film industry, and for anyone who wants to “break into” the film industry.

LIVE WEBINARS – RECORDED FOR YOUR REVIEW

Each live webinar is 1 ½ hours long, with voluntary quizzes and lots of interaction. For you CPA’s the live webinars qualify for 9 hours of CPE. Each webinar is recorded for review by the attendees for as long they wish:

-          # 1 of 6, THE FILM PRODUCTION BUDGET INTRODUCED

-          # 2 of 6, INTRODUCING FILM INDUSTRY LABOR UNIONS

-          # 3 of 6, THE CONCEPT OF FRINGES & LABOR HOURS WORKED/PAID

-          #4 of 6, INTRODUCING THE WEEKLY COST REPORT & THE SIX BASIC COST SYSTEMS

-          # 5 of 6, THE COST REPORT – ESTIMATING COSTS TO COMPLETE – EXAMPLES

-          #6 of 6, THE COST REPORT – ESTIMATING IN FILM PRODUCTION

In the final webinar we also discuss some common ways of breaking into this very insular industry.

For more information visit this web site: http://www.talkfilm.biz/filmworkshops5.htm

Cheers / John

John is a 30 year veteran of film production working on over 50 film and television productions in 6 countries. His workshops and book “Walk The Talk” have been well received with many testimonials. See http:///www.filmaccounting.com

State Film Tax Incentives and Culture

BACKGROUND

The earliest instances of film tax incentives had the purpose of retaining and nurturing culture. Canada is a good example. The film tax incentives began in Canada to nurture “Canadian Content”. It was meant as a way to guard against the encroachment of American culture into the Canadian society. The concept of “French Canadian Culture” has certainly taken root with the film tax incentives; the English-speaking centers of Toronto and Vancouver, and even downtown Montreal, embrace the infusion of American cash while learning and matching the American skills of filmmaking – well, that’s part of their culture, isn’t it?

WHAT CULTURAL ADVANTAGES?

Culture is what the people are doing; how the people are communicating and living life. Does the action of producing television and film in a State boost the local pride, infuse the community with a way to communicate, provide a skill that can be identified? YUP! Look closely at Louisiana and Georgia. I have visited New Orleans and Atlanta as part of my film accounting workshops, and I see a group of people who are downright proud of their participation in filmmaking. Personal pride always pays dividends.

WHERE FILM TAX INCENTIVES HAVE FAILED

Those States that have failed to maintain a film tax incentive, have failed to recognize the local cultural pride and development. The State was looking at cash-in and cash-out on a short-term basis, without a second look at the cultural advantages and how that pays off.

PRODUCE YOUR FILM, IN A TAX INCENTIVE LOCATION, WITH CULTURE IN MIND

A good example is the making of “Whole Nine Yards” in Montreal. The film was being produced in Montreal because of the film tax incentives there, and because it could double as a European city. During prep Bruce Willis decided to let the location BE Montreal, with French accents, Canadian money, and mayonnaise on a hamburger – it was not only produced more inexpensively, but the film went on to gross $106 Million worldwide. It’s an example of boosting the local culture while still making profits – and please take note – the film would not have been produced there without a film tax incentive.

HARD FACTS

Yes, the hard facts are that a State usually gets about 8% of the employees tax, plus 8% of the cast and non-local crew, then the State pays 25% tax incentives to the production company. However, there is also an infusion of millions of dollars into the local economy for purchases, rentals and facilities that would not otherwise be there. The win that tips the scales is the spirit of winning that is granted to the local culture.

If you want to find out more about developing your film, the skills of a film accountant, or just interested in the business of media, visit http://www.filmaccounting.com/filmbusiness.htm .

Cheers / John

Film Accounting 101 Workshops – Los Angeles and Tampa, Fl

FILMACCOUNTING101There are two workshops on Film Accounting 101 coming up. One on the west coast (Los Angeles) on May 17th/18th-2014, and one on the East Coast (Tampa, FL) on May 31st & June 1st-2014.

See http://www.filmaccounting.com  for more information.

Below is a quick rundown on what the 2 day workshop is all about:

_________________________________________

Introduction: This is the defining course for the fundamentals of Film Accounting. The course is a very practical hands-on workshop of 2 intensive days followed up with a series of 6 Live On-Line Training webinars. This is the toughest course I give, so bring your roller skates! We’ll start from the ground up, practicing all activities associated with an assistant accountant, gaining a thorough practical understanding of the entertainment general ledger software. Finally, the live on-line training webinars bring you into a senior level of Film Accounting through managing the Film Budget and Cost Report (the financial statements of film productions). The classes are small and all attendee’s questions and what-if scenarios are welcomed. See http://www.filmaccounting.com for testimonials.

Course Objective: You will understand and have practiced the duties of an assistant film accountant with the confidence that you CAN not only perform the tasks expected of you without extensive training, but also with an understanding of the cost control points of any film or television production. (Line Producers and Public Accountants will understand the background to their duties in controlling or auditing production costs.)

Participants: will be able to communicate to experienced Film Accountants and Producers convincingly, simply by telling them (showing them) what you have drilled to perfection in this workshop.

Who Is It For?

  • Anyone who has tried to find work as a film accountant and has found it difficult to break in, regardless of their previous training, experience or education. If you have a high aptitude with figures, a strong desire, and you have some basic skills in Excel and Word software, you qualify.
  • It has also been well utilized by Line Producers who want to strengthen their abilities to manage costs of a larger film production.
  • Public Accountants who need to audit the books and records of a film or television production have found this very practical grass-roots training invaluable.

See the details at: http://www.filmaccounting.com

 

Instructor: John Gaskin is a 25 year veteran Film Accountant.  He has worked on 45 film and television productions of every size in 5 different countries. John also has producer credits, and has been delivering film workshops like these for the past few years. See IMDb for his production credits and the web site link for more information about John.

Crossing Over to Film Accounting – Financing

FILMACCOUNTING101DEFINING THE WEAKNESS IN FILM FINANCING – NO ACCOUNTING EXPERIENCE

An accountant is seldom used to help the Producer pitch for financing. Most emerging Producers aren’t educated in pitching to financiers who are well schooled in standard business practices – and, even if the pitching Producer has some idea that help is needed in preparing financial projections, the cost of the accountant’s services may seem prohibitive.

ACCOUNTANTS GENERALLY LACK EXPERIENCE

Even if the pitching Producer does go to his/her local CPA, it may very likely be a disappointment. Most accountants ARE weak in this unique area of film finance. Ask any CPA about investing in film production and they’ll tell you straight up – too risky! But … ask that same accountant about investing in a rental property in Bohunk, say a small medical center, and the accountant will jump in with both feet. Why? Simply because the accountant has experience in similar projects and there is an infrastructure in place to find and analyze data of a similar nature.

FINANCING FILM PROJECTS IS PIONEERING WORK

The film industry has been a closed industry. The current blast of YouTube, Netflix, etc has opened the door to the industry, but it certainly isn’t a “taped path” to success. However, there are a few steps that are proven true in current film financing projects. These steps are only a crossover from standard business accounting to film accounting. The standards are still in the pioneer stages, so be prepared for some hard won work.

FINANCING = GENERATING CONFIDENCE WITH GOOD BUSINESS STANDARDS

The weakest factor for emerging producers to overcome is to have the ability to generate a financier’s confidence – that is, to have those with disposable income (financiers of any kind) feel confident that the film project being pitched will generate a return. That financier has several investment avenues available. Indeed there are teams of professional investors knocking on their door, all with clear documentation and proven track records. Your best hope of generating that confidence is to present your facts according a business standard that the financier is familiar with.

CROSSING OVER TO FILM ACCOUNTING

Enter the accountant, or professional producer, who has crossed over to film accounting. The film accountant is familiar with five particular ways of generating confidence – all of which should be referenced in any Executive Summary and Business Plan:

  1. FILM BUDGET: A professional film budget with both a summary page and supporting detailed accounts. If this document is unfamiliar to you please click here for more information. (Note: Within the appendix of the business plan include a copy of a standard “Cost Report” so the investor can see the industry standard of reporting the costs and how they are controlled.)
  2. STATE TAX CREDIT ESTIMATE: A clear schedule estimating the State Film Tax Incentive available based on the budget. If this topic is unfamiliar to you please click here for more information.
  3. FILE FORM D WITH THE SEC (CROWD FUNDING): Show the investor that you are only looking for “Accredited Investors” by filing a “Form D” with the SEC. This is a relatively simple form which separates you from the novice who is looking for a freebie. Please read my blog on this topic to get a better understanding of what it takes to legally solicit funds broadly.
  4. CASHFLOW REQUIREMENTS: A weekly cashflow requirement schedule both in summary and in detail by account (based on the budget). Click here for more information.
  5. FINANCING CASHFLOW SCHEDULE: By preparing this schedule the investor can see that you are transparent and alert to the costs of borrowing from film friendly institutions. Click here for more information.

Including these documents in your business plan, clearly referenced in your executive summary, will raise your credibility meter significantly with any financier.

For those of you interested in getting into film accounting in a more detailed way, should visit my web site for upcoming Film Accounting 101 2 Day workshops – two coming up, one on the West Coast and one on the East Coast. See http://www.filmaccounting.com

Cheers / John

30 year veteran of over 50 film and television productions in 6 different countries.

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