Budgeting for Film

first things first

Find the money from somewhere - bank loan, family, friends, Kick-starter, investors

Studios fund their own films

Film Budgeting and Accounting Tools

Assumptions

Budget

Cash Flow document

Check requests

Purchase Orders (P.O.s)

Petty cash

Weekly Cost Report

The Process...

A producer has a script and asks,

“How much money do I need to find to make this script??”

The producer hires a production manager to do a breakdown, schedule and then budget, in this order.

The Process...

Why in this order??

Because you need to know how many days of shooting are required in order to create a budget.

The production manager comes up with a rough budget.

The producer has provided some information that only he/she knows at this point - budget range, where they will be shooting, union or non-union, etc.)

We call these “Assumptions”.

The Process...

An assumptions page is a way to learn about the parameters of a project in a “snapshot”.

The form is customized for the type of project - this is one for the UCF MFA projects.

Once the producer and PM have agreed on the budget amount and how the money is allotted per account, the funds start flowing as per the cash flow statement (hopefully the investor starts depositing the funds as per the cash flow...)

The accountant is the one who creates this document.

This document projects when you need the money and for what.

A calendar is created that shows when the deposits need to be made and for how much because the investor won’t give you all the money up front.

Cash Flow STATEMENT

cash flow statement

the budget

Now the accountant really gets the budget tidied up while the production manager continues to research costs and collect data from department heads - vendors, production designer, location manager, costume designer, etc.

the budget

The budget itself has some consistent elements, common to all film budgets:

TOPSHEET AND DETAIL LEVELS

ABOVE THE LINE AND BELOW THE LINE

THE TWO MAJOR MODES OF THE BUDGET

Topsheet(called the summary in ShowBiz program)

Summary of total budget

The header section of the topsheet has the basic information about the project - producer, director, dates, etc

topsheet level and account level

Topsheet

THE TWO MAJOR MODES OF THE BUDGET

Account Level (called the detail in ShowBiz program)

Detail level lists individual items that comprise the account

Shows your math - how you arrived at the amount you think it will take to accomplish the goals

Where the calculating is done - more on this in Modules 9 and 10

topsheet level and account level

Account Level

above the line & below the line

THE TWO MAJOR SECTIONS OF THE BUDGET

Above the Line = producer, writer, director, actors

Below the Line = crew, equipment, post production and misc: contingency, insurance, bond company, legal fees

NOTE

The distinction between ATL and BTL has nothing to do with creative input - the production designer, editor and director of photography are all listed below the line in the budget and yet they are key players for bringing the creative vision to life.

ATL = initial creative costs

BTL = the cost of making the script

PREPRODUCTION

As preproduction ramps up, money gets spent by department heads and their teams, the office and the accountant - through checks, petty cash and purchase orders

The Production Manager approves all expenditures...

or not.

The approval is based on estimates that the PM and accountant have factored into their main production budget.

There is a plan for how the money will get spent, on what, and that there is enough money to accomplish the task at hand.

Check Requests

Department heads fill out a check request asking for a check to be cut to pay for something.

The accountant gets the request and matches it against the budget to make sure it is within what that department has said they’ll need.

Checks are paid out after the production manager has reviewed and approved the check request.

Purchase Orders

The production accountant sets up charge accounts as necessary – Costco, Panavision, Hollywood Rentals, Western Costume. etc.

Department heads ask the production co-ordinator to fill out a purchase order for approval by the PM so they can charge items at the places with charge accounts set up.

petty cash

Petty cash is a small amount of discretionary funds in the form of cash used for expenditures when the inconvenience and costs of writing, signing and then cashing a check is too time-consuming.

petty cash

On film productions, it’s often several thousand dollars floating around in the form of cash.

There is a very specific way to keep track of it.

We’ll talk about petty cash in Module 10...

Cost report

The cost report is the weekly report that is reviewed by the producer, production manager and accountant to see if they are on budget - or if they are trending to go over budget and why.

Overages in one account are often offset by savings in another account.

As long as everyone knows where the money is being shuffled, it’s a sensible practice.

Philosophy

Budget changes all the time until first day of production, then it is locked

Horse trade - give up one thing to pay for another

Always know where you stand by generating and analyzing your cost reports

A budget has an organic flow - it is a living, breathing thing that is constantly changing

Get dept budgets from the dept heads - don’t try to guess those numbers. They have the experience, let them be the experts. But make sure you trust them!

Put EVERYTHING in the budget - if you leave things out, it is impossible to know the true cost - and to anticipate how to accurately budget your next project

Philosophy

Get an accountant or at least someone who’s job it is to mind the money

ALWAYS get a receipt or chit

Use Quicken to keep the books

Open a bank account just for production

Keep excellent records

relax

A budget is just a series of questions about your project.

There is no need to be afraid of this process - once you understand how helpful the budget process can be, you may actually enjoy it.

Nothing gave me more confidence as a production manager than knowing exactly where we stood financially.

When the director asks for something, I want to know how we can pay for it - so they producer can say yes...

You cannot fear money

Don’t Underestimate the Power of Tinsel

END