FIND ANSWERS: A QUESTION ABOUT PRODUCTION ACCOUNTING
I’m producing a low-budget feature and putting together a preliminary budget. I don’t have much money to allocate to crew positions. Is it really necessary to hire a production accountant or can I do that myself?
I’m always emphasizing that you need a good entertainment attorney for your project. I’ll second this notion for having an experienced production accountant. The production accountant isn’t simply the person writing the checks. He or she fulfills a complex function with a lot of responsibility. It’s crucial to have an experienced person you can trust in charge of the daily operations of the project’s funds while keeping an eye toward its overall budget. Don’t assume that a producer or any other member of your team can simply take on these duties. Production accountants work behind the scenes and don’t have high visibility on set like most crew members, so it may be tempting to think that you can get along without one, but this would be a big mistake. In my experience, a good production accountant will ultimately pay for his or her position by saving the production money in ways that might easily be overlooked. These are a few of the duties they perform:
- The big picture: The production accountant works closely with the producer and production manager to create a realistic budget that incorporates expenses such as sales taxes and guild fringes that aren’t always included in a preliminary budget created for development purposes. Once you get to the pre-production stage (and even beforehand) you can’t afford to ignore the real costs involved in making your film. This is where the production accountant is key. She and the production manager should be well-versed on current rates for crew and equipment. She will budget for tax withholdings and fringes unique to each guild or
union to which the production is signatory. She will also need to plan for ancillary labor costs such as overtime, meal penalties, rest violations. In addition, she should create a cash flow that predicts the amount of cash required at any given stage of the project. If the production is applying for film tax incentives, the accountant will help you calculate those savings for your budget and provide the financial documentation required by incentive programs.
- Day-to-day: The production accountant will carefully monitor costs and watch for unexpected expenses. As a producer, you’ll be doing this, too, but are you really going to spend your time checking the assistant art director’s time card? You probably will have bigger fish to fry no matter how low-budget your film. The production accountant can compile helpful daily “hot cost” reports, which document more or less in real time how much is spent on a given day of shooting, thus giving you a quick snapshot of where your resources are going. These reports provide an early warning system so that you can correct budget overruns before costs get out of hand. If the production is guild or union signatory, it’s definitely to your advantage to use a payroll company, and your accountant will have the responsibility of working directly with them as well as your bank.
January 25th, 2012 • 1 Comment