Astute financial management such as a detailed cash flow record and PO log is a must when you’re handling a production budget. Whether it’s a film budget, commercial budget, or even a photoshoot budget; you need to know where your money is going.
Are you the UPM, production accountant, or producer who’s been tasked with overseeing your production cash flow? If so, now’s not the time to just “wing it” when it comes to the film’s budget. To have a successful production, you must manage those funds with the consistent and comprehensive handling of your cash flow log and PO log.
We’ve all heard the stories of films going insanely over-budget–Cleopatra, anyone?–which can make a movie come to a screeching halt. That’s why it’s critical for you to have an iron-clad handle on the management of your movie costs from day one.
The good news is that we’re here to help you do just that.
Cash flow logs and purchase order logs are essential for production accounting and should be used at the outset of a production all the way through to the conclusion of it. Accounting for every production cost as it occurs minimizes expenses getting overlooked and allows for efficient and accurate wrap reports.
Make these essential tools your go-to financial management aids. With them, you can better ensure that your budget stretches from development to distribution with few hiccups.
During development, the script is finding its final form–or at least final enough for filmmakers to secure funding with it. Funding streams are secured, the preliminary budget is set, and a projected schedule drawn up.
On occasion, a director might become attached at this stage. This will not be relevant for your PO as payment and official hire wait for the green light.
Actors are cast, the principal photography schedule is finalized, and the overall production budget is loosely allocated across the different filmmaking stages to come.
Rehearsals may take place during this stage as well. If so, it will require payment for rehearsal space, everyone’s time, and, as always, crafty.
Lights, camera, action!
The fun part of filmmaking. Also the most expensive part of filmmaking.
The crew and cast must be paid. Locations rented. Sets, props, and costumes made or bought. Craft services provided every day. And that’s just the basics. You may have stunts to coordinate, prop cars to rent, and studio teachers to pay.
It will all add up quickly, so this is where you need to monitor your spend like a hawk. Fill out your paperwork and make sure your accountants always know where the money is and how much is left.
Post-production is when you hire the editor, composer, and sound designer. Pending the intended release date, post-production may overlap with principal photography, as you start editing before you finish the shoot.
Note that unless these professionals prefer their at-home studios, you will have to pay to rent editing bays, sound bays, and other required equipment.
Given the plethora of distribution options available to filmmakers, the expense of it depends on what route you take. More traditional distribution models place the initial expense onus on the distributor.
But if you’re intending to independently go the film festival route or market it independently with the hope of getting picked up for distribution or an outright sale, you again will be funding it through your production budget.
The big key to production cash flow and PO log success on any project is a thorough script breakdown.
A comprehensive script breakdown will become your primary blueprint when it comes to cash flow allocation. You will determine a number of budgetary items during this process. Including, but not limited to:
As you do a script breakdown, it helps to use film budgeting software that can quickly organize your numbers and give you realtime breakdowns of where your budget is going.
Your script breakdown will offer a detailed assessment of where your dollars are being spent during principal photography. With that number determined, you’ll also know what you have left for the other filmmaking stages. As mentioned, these phases too can come with considerable expenses.
But here’s the thing. Even the most experienced UPMs, production accountants, and producers may not adhere to every part of their initial production budget. Life happens.
Unexpected events like the lead actor getting sick, a suddenly unavailable location, or a broken down camera can happen. Not just can happen, WILL happen.
Which is why no matter how confident you are in your budget, you should always allocate a percentage of it to those unexpected emergencies that will happen at any and possibly all stages of your production.
When you agree to manage the production cash flow and PO log, be sure to account for all things big and small that can throw off the management of them. That’s why the job is called “production accounting.” You’re accounting for every expense.
With an efficient cash flow management process, you can track daily your filming expenses and know exactly the funds you have on hand at any given time for each stage of your production.
To maintain a comprehensive and organized cash flow record, make sure it includes the following information:
The purpose of a PO log or purchase log is to track the payment details for every translation for the duration of your production. With the right data inputted, a PO log should be able to answer the following questions:
But how to fill out a production PO log? To ensure you can answer these questions, you must include all of the following information on all PO logs:
By managing your cash flow efficiently with our purchase order log template, you can enjoy the following benefits:
At the top of this list is not running out of cash! You might have several objectives as the UPM, production accountant, or producer on a project, but there’s nothing more important than always having funds.
With organized cash flow records and updated PO log or purchase log, you are far less likely to mismanage those funds, overspend, or just run out of cash before you get to that filmmaking finish line.
Nothing will sink a production faster than an unhappy cast and crew. Nothing makes them less happy than not getting paid! Don’t make the grave error of mismanaging funds to the point where they don’t get their paycheck on time every time.
Who's going to tell your cinematographer that you no longer can rent that camera they needed because you misallocated the funds for it? Or that you lost out on a location because the deposit wasn’t paid on time? If a circumstance arises where there is a location or equipment mishap, make sure it’s not because of purchase log issues.
The least of your worries on a production is, well, worry. Even under the best of circumstances, making a film is stressful. But the last thing you want is your cast and crew whispering about your mismanagement.
Your professional reputation is the difference between a career in film and your backup job.
Maintaining your cash flow records and PO log or purchase log means having people look up to you for your budgetary and organization skills. And that means the security – as much security as there can be in this business – of future work.
Cash flow gaps may still occur during a production because film financiers typically follow an incremental payment process. The film producer receives funding in installments of varying ratios depending on the lender. As a result, what you receive may not cover what you need.
Given the incremental inflow of funds, producers are often required to spend on production necessities before receiving their next installment. But if you are a project’s producer or accountant, it’s your responsibility to anticipate these problems and resolve potential cash flow gaps. In such cases, you may need to secure a loan until the next financing payment kicks in.
An updated cash flow record and clear PO log or purchase log are essential tools you need to track how you spend your film budget.
While it sounds simple enough, you can quickly drown under the fast and furious expense requests you receive from the moment your production gets the green light. But Wrapbook’s cash flow log template and purchase order log template can make sure you don’t sink under the weight of those requests.
And because production payroll in particular is such a prominent part of any film’s budget, it’s imperative that you avoid any mistakes or oversights that could upset your cast and crew or even land you in legal trouble because of accidental noncompliance.
That’s again where Wrapbook comes in. Not only will you see payroll spending in real time on a production, but also you’ll have peace of mind from us handling all the nitty gritty like payroll taxes, wage notice requirements, and blended overtime rates. You’re going to have a lot on your production accounting plate, so let us make it easier for you to handle.
At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.