Literally, where is the budget held after financing? Hypothetically if I raised $100M for funding and it's deposited into my production company's bank account, I can imagine how much hell Bank of America would give me afterward treating me like a drug dealer or something. Are film funds held in escrow accounts or with some kind of accounting firm? I need to know before I start pitching for funding.
Financing / Crowdfunding : Technical question about financing a film by Dano Veal
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That's a complicated question and depends on what you are trying to do and how. ideally, you get the funds. Otherwise, you haven't completed raising them, right? Sounds like you need to discuss general film business structures on this one and that's not a topic for a small post. You should attend my 6-part series Navigating Production. It's a very detailed overview of the process from development through distribution. It will be offered shortly for low cost through the IIPG and there is a free rotation offered through Women In Entertainment starting May 18 (you don't have to be a female to attend).
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To protect the project funds from other company expenses or company projects, I would highly recommend establishing a project LLC with a separate banking account just for that project. Escrow would only be advisable if one of your financiers is waiting for a particular milestone before releasing the funds to you (i.e. signing an actor, securing a location, signing a distribution deal, etc.).
Also, Bank of America won't give you any trouble because the money will be spent out in different ways - payroll for cast & crew (you should really hire a payroll company so that the bank only deals with them), purchases and rentals (which should be done via check or through your company credit card and not your debit card - so again, your bank will only ever have contact with your credit card company for those payments), and fees (i.e. location fees, insurance fees, licensing fees, etc. - which can either be paid via check or credit card). Ideally, you have an accountant to process all checks and keep those expenses separate.
I do feel like a smart business person would not keep all their money in one place, though. In TV, we have milestones where the network sends over a portion of the full-series budget once a commiserate portion is completed and delivered. I feel like something similar would be recommended for feature films to ensure no overspending throughout.
I hope that helps!
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It’s important to make a detailed budget which is managed by a line manager and overall by your accountant. The line manager checks the amounts are going to plan accordingly to the budget. You can’t eg ask for another set of lights or new location without Lind manager agreeing you have the money to do this. Then invoices come in, the accountant also checks these off against your budget and pays or calls the producers to task. This is on bigger budgets but small ones you have yo manage it all yourself. In the budget you have a 10% contingency for any sudden needs and this helps to manage the money.
Super helpful! Makes total sense. Thanks all
Concur completely with the above. Escrow accounts will hold funds until all finance participants have contributed, then it will either be deposited or pending agreements, drawn down according to a draw down schedule. Same with financiers in general if they are holding the production funds. For an indie film, an LLC is formed and contributions are added as above (escrow, production account.)