Creating Investor Confidence For Your Film Project

“ACCREDITED INVESTOR” – THE OFFICIALLY WEALTHY WHO YOU NEED TO SOLICIT FOR FINANCING

The “accredited investors” as defined by the new SEC ruling allowing for general solicitation, are officially wealthy, and are accustomed to dealing with basic financial reports and terms.

THE HIGH RISK OF INVESTING IN FILM

Mr. Bucks has heard about the high risk of the film business. You will need to create the confidence with Mr. Bucks that you CAN produce – at a return. So, now, more than ever before, it behooves Indie film producers to understand the basics of the film industry as a business – especially if he/she wants to solicit the officially wealthy who don’t know film.

THE BUSINESS LANGUAGE OF FILM

For those of you who do learn the Business Language of the film industry you will find that doors previously closed to you will open – just a crack , at first, but with some perseverance the Completion Guarantors, experienced Directors and Cinematographers, some Mini-Major Studios, etc. will be impressed and will offer more and more opportunities. Success breeds success, and it starts with generating confidence.

CREATING CONFIDENCE THAT YOU ARE FISCALLY RESPONSIBLE

From my point of view (30 years in the ‘biz) there are 5 or 6 things you should learn more about, and with a little practice, you will have a very good shot at creating the confidence needed by the investor that you are fiscally responsible. You really can’t lose. In my book, “Walk The Talk” I refer to it as “Directing the Money”.

Here are the topics. All are inexpensive online self-study courses. Most of the information is on video. See the Filmmaker page of my website:

1. Learn More About the Full Business Cycle of the Film Industry (From Development through to Revenue Sharing)

2. Have a working Insight Into Film Tax Incentives in America and Canada as a Source of Financing (Including Section 181)

3. Know How to Manage Film Budgets Professionally (not create from scratch, just to be able to manage)

4. Know How to Manage Cost Reports Professionally

5. Know the fundamentals of Creating Cashflows “Out”/”In” for Bank Loan Purposes

6. Understand the Role of Hot Costs During Film/TV Production 

Knowing these topics you won’t be confused with the clutter of people who “have a great idea”.

For more information on the online self-study courses offered see the Filmmaker page of my website

Cheers / John

http://www.youtube.com/watch?v=tYduDZHNRhw

THE FILM PROFESSIONAL ON-LINE TRAINING SERIES – Part 1

For the past few years I have been doing live weekend workshops – sometimes in a flurry and sometimes spread out over time. The biggest hurdle is scheduling the location and time. Not just for me, but for you all as well.

DILEMMA

It’s a dilemma. Some of you want more than I have on the Agendas, some less, and some want more emphasis on related areas, etc. For example, some want the full detail of how to do Hot Cost, and some want only enough to know how to budget for Screen Actors Guild costs. I will continue to do live workshops, but it’s tough on all concerned to arrange their schedules, their travel, hotels, etc. So, my dilemma has been how to get what you want out to you all in a way that works for you and can fit into our busy schedules.

SOLUTION

So, I have decided to start doing a series of advanced online training webinars that can offer a wider variety. Some will be Live – and recorded simultaneously for you to review at your convenience. Others will be pre-recorded and made available with all of the materials. In each case I’ll keep the webinars ‘bite-sized’ so that you can zero in on the material you need to know in order to advance your career in film.

EACH RECORDED ONLINE TRAINING WEBINAR HAS ITS OWN SPECIALIZATION

One series will be general and the next series will have more details.

One series will be for those interested in Managing (i.e. Line Producers, Unit Production Managers, etc.) and the second, more detailed series, for those who want to know how to The topics that can be done.

RECORDED FOR PRIVATE UNLIMITED VIEWING AND FILE ACCESS

Note that each recorded webinar has attached to it, through an ingenious web site called Screencast.com, all of the materials used in that webinar and all files are easily downloadable – such as template budgets in Excel and MMB, Guild/Union agreements, vital links, gross payroll calculating templates, actual cost reports, template cost reports, etc.

TO START – TWO TRAINING TOPICS

(To Be Continued)

The Hot Cost Report – Knowing Film Payroll

On Sept 2, 2013 I finished a Hot Course Online Course – see this YouTube link for more info

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Original article:

About 2 or 3 times a month I get a comment on this blog asking me if I can send a copy of a Hot Cost. From the tone of the request I sense that I am the last resort and the Hot Cost is a matter of getting the job as a key accountant or not getting it. I always oblige, but with a cringe because I know that without the background understanding of film and television payroll the Hot Cost won’t mean a whole lot to them.

Anyone who has been working in film production accounting, or as a Unit Production Manager, knows that “Hot Costs” exist, and they may have seen them. But it’s the key production accountant who prepares them. They’re a bit of a pain to set-up; however, once in place they’re easy to maintain.

I have written only one other blog about Hot Costs, mainly because it requires a pretty good understanding of payroll, as well as Excel, to really understand the background of it all.

For those of you who missed my earlier blog, I’ll start out by defining, in my own words, what a hot costs is:

- The Hot Cost is essentially daily report which compares the actual variable labor costs with the budgeted labor costs for every person on set. A few other variable costs are compared to budget on the topsheet of the Hot Cost, especially if it’s easy to measure them on a daily basis – like the costs of catering, or, if shooting in 35mm, the cost of raw stock, processing and work prints. Since 35mm is seldom used anymore, that’s gone by the wayside.

Boiled down, the, the Hot Cost is really all about measuring the daily cost of labor (Cast and Crew) with the budgeted amount of daily labor.

The Ivory Tower:

The Film Production Accountant prepares it, and usually the assistant accountants are too busy to get involved – or, if they have some time, the key accountant is too busy to show them. This task is seldom allocated to an assistant (unless the film production is obscenely huge). It is the one task which mystifies most assistant accountants, simply because they are seldom involved directly in preparing it. Another drawback that I’ve noticed with assistant accountants in the last 10 or 15 years is a tendency to specialize in one area, such as running the general ledger duties, but ignoring the payroll duties; or, being pigeon-holed as a payroll accountant only, and not understanding the cost report duties. I have had some pretty nervous requests to explain Hot Costs as a 1st Assistant starts to reach toward being a Key Production Accountant, mostly because of their continuous specialization, rather than understanding all facets of film accounting.

The Daily Production Report (DPR):

Each day the Assistant Director’s prepare a “Daily Production Report”. The In/Out times, as well as the lunch break, is recorded on the DPR. Every person who worked on set is named along with their title. In addition, the DPR shows all the times related to each and every actor, the number of lunch plates, the page count shot (per the Script Supervisor),any notations of accidents/delivery of major equipment/illnesses, etc.

Click on the link to see an example of the front and back pages of a DPR:

DPRBack  DPRFront

Understanding Payroll:

Once you get a grasp the union rules you’ll start to wonder what all the fuss was about. No matter what union contracts you’re dealing with, each 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 travelling outside of a defined “Studio Zone” (also often referred to in each locale as “The Circle”).

For those of you newly exposed to Screen Actors Guild, the various IATSE (crew) Locals and the Teamster (driver) Locals, it may seem a little too much, it’s MUCH easier than learning to use Excel – so, have a little patience, do a lot of practice time cards, and you’ll have it.

Conversely, for those of you who have had to hide behind being a Payroll Accountant, but never had exposure to the Cost Report, have no fear. It’s much easier to learn than the other way around (check out my blogs that begin with #1 of 7 through to #7 of 7).

The Excel Task:

Once you have a grasp on the SAG and crew payroll rules, the task ahead of you is to set-up a hot cost format that can quickly estimate the cost of labor for the day and compare it to the budgeted cost per day – for each and every person working on the set. Kind of a tall order “right out of the box”. If you’re using Excel, the only efficient way to do a Hot Cost, you should be able to copy paste the previous day’s time out, enter in the In/Out times of the day your analyzing (i.e. yesterday) for each person, then have the Excel formulas do the rest.

The Payroll Solution to Understanding Hot Costs:

The solution to understanding any Hot Cost is to find a central source of contracts for SAG, DGA and IATSE then summarize the four 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 you can work anywhere in America or Canada – 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.

The Training and the Practice:

I’ve found that a full weekend practicing the film and television 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 templates (yes, with the formulas) which are “helpers” ad which you can use to develop your own Hot Costs, no matter the circumstances. I leave you with on-line links to all of the materials – see this link to get an idea of what I mean.

Have a look at this link to a short video of how my SAG on-line course works.

Check out http://www.talkfilm.biz  if you need some more info about cost reports, production accounting, managing film budgets, etc.

Cheers,

John

“Hot Costs” – a big part of a Film Production Auditor’s Job

As of Sept 2, 2013 I finished an online Hot Cost Course.

For more info see this short 2 minute YouTube Video:

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Original Article:

I wrote a longish email to a young man who wanted to know  a few things about my workshops and one of the things he raised was the Hot Cost – a daily comparison to budget done by the Production Accountants. I spent some extra time describing it because I don’t include it in my workshops (yet, anyway) and I wanted him to understand why.

I decided to post my answer to him on my blog for all to see. Here it is:

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The principle of a Hot Cost in film production accounting is to compare the actual costs of the previous day’s shooting with the budgeted costs for a day of shooting. The Hot Cost is meant to be measuring only within the scope of the on-set shooting crew, cast, footage/processing and catering. I like to sneak things into the Hot Cost that I know are over-budget, like any equipment or off-set riggers, etc. Although, that’s not it’s true purpose.

In the early days, say early to mid 90′s, the Hot Cost was meant to be just that – some quick calculations done manually on the back of the penciled copy of the DPR (Daily Production Report). The UPM and I would sit together and quickly round out an average labor cost for the Electric’s, an average labor cost for Grips, etc right through the list of on-set departments per the DPR, with maybe a little more of a cost accounting schedule for Transpo and Cast. It really only took about 1/2 hr. Then, a couple of the Majors  started getting fussy and insisted that the Hot Cost results go into the Cost Report BEFORE I had any meetings with the Line Producer/UPM. That’s when it became more of a precision thing because Producers will always challenge an over-budget line item, and the Studio gets upset if you miss an over-budget line item. Now, you’re right, a chunk of the Production Accountant’s day goes to fussing with the Hot Cost, simply because so many people use it as a crutch – now it’s often used as a Daily “Cost Report”, even though that’s not it’s original purpose at all – and indeed is an impossible purpose given the scope of the Hot Cost.

If you have a “usual” hot cost front page, like the ones that Disney and Universal use, then you can build Excel worksheets that feed that. This saves an enormous amount of time for the Production Accountant during the shooting period, but it means that you need to be an Excel junkie. Sometimes the studios only want to see the front page without the supporting schedules, and sometimes Line Producers/UPM’s refuse to believe the Hot Cost without supporting schedules, so you need to have it all.

So…. I guess what I’m saying is that the Hot Cost has become an Excel series of side schedules prepared every day by the Production Accountant.

I have developed a series of said schedules that I massage for every show – for the different chart of accounts and for every geographical location (needs lots of prep time or I end up working until midnight several nights in a row right before the first day of shooting). It has a worksheet for just about every function related to labor and each worksheet feeds the lead page. The intention is to automate the estimated pay hours, and compare the resultant cost with the budgeted cost, for:
-every crew member on the floor,
-every fixed category of Transpo who worked,
-and cast member who worked that day,

-every line-item in the budget classified as “ManDays” (sometimes called “Dailies” a slug line saying 25 man-days without much thought put to it),

-Extras, Stand-In’s

Then do a variance calculation as compared to the budgeted day.

Remember to keep in mind that there are 2 kinds of variance:
- Hourly variances worked (also in this type of variance would be the person who was budgeted at one hourly rate then is being paid at a different hourly rate – rare, but it happens)
- Volume variance (i.e. more crew hired on for that particular line-item)

You can imagine that if you had to do all of that with a calculator every day, it would be a difficult task on anything over 50 to 75 crew and a few cast. Note that most feature films have double that on an easy day.

Throw into the mix an inexperienced AD (assistant director) team who aren’t promptly getting you the in-out times of the crew/cast and you are up the proverbial creek.

It’s a big job to teach someone a course on “How To Make A Hot Cost”. Not only is there a lot to learn about payroll (understanding SAG, DGA, IATSE in different circumstances in different geographical areas), there’s also a lot to learn about Excel. In your case, because you have a background in payroll accounting, it should make sense very quickly.

Are you familiar with Excel? I’ll attach the working example that I have for a feature film I just finished up in Toronto for a budget over $20Mil. Have a look at it, and if you can change the formulas to calculate pay hours for an IATSE International Low Budget  feature I would much appreciate a copy. (I haven’t landed on one of those yet).

To get back to the workshop – come to the one on March 6th and I’ll answer your Q’s and work with you towards your goal. There will be a few times when we’re going over material you already know, but that’s cool – I’ll get you to help answer the other attendee’s Q’s :))

Best,
John

Managing Film Budgets & Production Costs

I have discovered Vodpod. This is a practice blog to see how the video blog works. The video describes the workshop on Managing a Film Budget and Production Costs.

Graybeards of the Film Biz – the Film Production Accountant

Woe is the poor film production accountant. Well paid, but overworked and under appreciated. Ask any working independent producer who his/her key people are during the film production and right after the UPM, and parrallel to the 1st AD, is the Production Accountant (or, sometimes called, the Production Auditor). Unlike the UPM and 1st AD, who have the bigger salaries and DGA resid’s, the production accountant’s credit is about page 14, right after the three set PA’s who were in charge of keeping the pathway clear at the back of the studio.

An experienced production accountant knows the key ‘Blue Suits’ (the financiers of every shape and category), the multiple unions and arbitrary rules, the bonding representatives, the banks, the budget’s secret pads and worrisome points, knows THAT ‘guy’ at the Union office who can fix that problem, the cast agencies, the IRS contacts, the payroll in’s and out’s, the magical ways of presenting the film’s progress through the production period to said financiers and knows whatever gossip is most current in the very village atmosphere of international film/TV production.

Many of the accountants are also tough as a rusty spike – after all you can’t suffer under the responsiblity of the budget’s bottom-line without much acknowledgement for 15 or 30 years without getting a little testy. In the most part, though, production accountants have seen that what-goes-around-comes-around and they (we) mostly keep an eye out for their (our) charges. My approach is much like an Uncle who takes the nieces and nephews to the nearest entertainment show – hey kids, I’m benevolent, but only to a point, then I’m able to blow you backwards through the nearest cinder block wall.

What’s not to like?….much.

Who are these graybeards of the film production world? Why is it that the only thing most cast, directors, the bulk of the film crew and even high-end Exec Producers know about production accountants is that they make paychecks?

Well, they know every detail about how-to-direct-the money. It’s a LOT of detail, especially when dealing with the Majors (the ‘Majors’ is the big, and growing, list of Hollywood Studios who negotiate as a group with the powerful IATSE crew and Teamster unions) or when dealing with the Bonding Companies (something every independent film production knows all about).

Some time ago Ron Howard called for a meeting with the UPM, the Exec Producer and me (the Production Accountant). Ron wanted to know why the budget was so high. It was an honest attempt on his part to learn how to ‘Direct The Money’. He has a professional viewpoint and it’s difficult to impossible to be a professional without also having an eye on the film production’s bottom-line.

We were all a little stumped, as you can imagine. It was in New York city, in the mid-1990′s, and much of what we all do is on automatic that trying to back into the place where Ron was – well, it was a time for squirming in your chair.

So, I determined to write a book for the non-accountant. the very basics of Directing the Money. I ended up calling it Walk The Talk, and it does well on the internet. A couple of Universities have it in their producer programs (U of S.Calif and the U of Tampa), with a couple more in the wings.

It wasn’t easy to write because I wanted it to be able to start from the literacy level of a film school graduate (no jokes, please, as many of us are also grads of smok.. I mean universities).

If you want to know more, check out my site at http://www.talkfilm.biz

Blog me if you want a free template for your film project’s budget.

Indi Film Production

When trying to get your screenplay produced and distributed there are moments of despair – especially if you’ve travelled the road a while and have studied what the universities have to offer. The basic elements of Development, Pre-Production, Production, Post and Distribution are interesting diversions when compared with the real process of raising confidence, collaboration and eventually money, to produce and distribute your ‘baby’. That’s the thing about filmmaking – until you’re at the very top there can never be a missed opportunity to show what you can do.There can never be an ivory tower – it has to be down in the trenches face to face, intention to make it unalloyed by ‘other fish to fry’.

How do you do that? Well, I’ve seen Film Producers come and go, and there are always two qualities apparent in all successful producers – PERSISTENCE and THE ABILITY TO MAKE DEALS. Persistence is a given – if you don’t have it, take a full time job somewhere and forget about filmmaking.  Deal-making is really an ability to confront other people and to scrape together something that works for both of you – it almost always comes down to MONEY and FILM BUDGETS. If you aren’t good at making deals then collaorate with someone who is good at it. It may mean some creative sacrifice, but – hey – that’s part of the deal.

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