Fiscal Responsibility on a Short Film (with FREE Petty Cash Template)

1.1 A CASE STUDY

Learn about budget nightmares

Poor financial planning is what every short filmmaker or producer wants to avoid at all costs.

For instance, you're in production on the short film that you've worked six months to fund and prepare. It's the last day of production, and your production designer comes up with a great idea for a prop.

Alas, there is a problem. It costs more than the art department in your short film budget allows. 

You figure "that's what the contingency is for, right?" and approve the expense. The production designer sends a PA to you for petty cash so she can go make the purchase. You check the petty cash envelope, but there's less money in there than you expected. Maybe someone tipped the pizza delivery guy? 

So you tell the PA "just buy it and bring back the receipt - we'll reimburse you!" The PA says she needs her reimbursement today, or she might not have enough money to cover the rent. Off goes the PA. 

In comes the cinematographer with a long face. "We broke the lens."

Ouch. But hey, that's what insurance is for, right? You'll have to pay the deductible, but again, contingency should cover that.

The PA returns with the thing for the art department, and a receipt that's 10% more than what you expected - they charge sales tax, remember?

Then the director says they've got to overhaul the scene and shoot it a different way. Alas, another problem. It'll take the production an extra two hours into overtime. "We have some contingency left, don't we?"

Do you? Unfortunately, you haven't been tracking your budget overruns.  But, it’s never too late to learn the essentials of managing your budget and cash flow.

"What about pulling from departments that came in under-budget?"

Your director is clever...they can do anything they put their mind to, (see below).

But... you haven't tracked those purchases, either.

Your production budget tells you how much per department you can spend, but suddenly it seems useless if you can't track your purchases.

"But I know how much money we've spent! I can look that up on the bank website!" you tell me this.

But we both know it's not true.

The bank website doesn't show all those checks you've cut that haven't been deposited yet. It might not even show the most recent debit card transactions if they haven't yet cleared.

While you're thinking, that PA comes back and asks for her reimbursement. You reach for the checkbook and discover that you cut all the checks for the crew, and have no spares left.

What do you do? What can you do?

Relax. Take a deep breath.

Fortunately for you, this is all just hypothetical.

You're about to learn all the steps you should take to prevent such a production disaster from happening to you. Along the way, you might also learn how to make money with short films. 

Because you can’t make money if you can’t control spending.

First up…

2.1  STEP ONE

Limit Your Accounts

When it comes to film production accounting, one of the first things you do in pre-production is open bank accounts.

For short films, this is less likely, since you're not dealing with as much money. You might find it easy enough to manage your film's money in your regular bank account.

But you might have multiple accounts (personal and business, perhaps). Or you might have several credit cards (one for miles, one for points).

As a rule, unless you want to spend all your free time on forensic accounting, use as few accounts as possible for your short film.

Not how you want to spend your free time? Follow our tips for film production accounting. Then, as soon as you can, decide which of these you will use for your film. 

Don't touch the others.

2.2 BANKING

Check out the rates

If, like most filmmakers, you're using a personal account to make your short film, make sure of a few things:

First, start with all of your film's money in that one account.

You might be tempted to put some of your production funds into a savings account, but that will complicate your film production accounting down the road. Also, some savings accounts have withdrawal limits (x number of withdrawals per month). These could hurt if you need quick access to money during production.

Second, order fresh checks. And order enough of them.

You are most likely to pay your cast and crew by check. There may also be reimbursements that you'll want checks for.

These will be essential parts of your responsibilities, especially if you are the line producer on the film. See more below.

As a good rule, figure out how many checks you'll likely need, and make sure you have doubled that quantity.

Third, make sure you have full access. Test your bank's web access if you don't use it regularly. Make sure you can check your balance online.

If you're not a regular debit card user, test that out, too. You might not use it on your film, but make sure it's available, just in case.

2.3 CREDIT VS. DEBIT

To charge or to swipe

Debit cards are a more direct way of spending your production's funds.

Why?

Your debit card draws money from the same account as the checks or the ATM, so the accounting is much easier to follow.

That said, some vendors may have a hard time with a debit card. So while it's not a bad idea to have a credit card available...

Here's a terrible reason to get a credit card:

"What if there are necessary expenses that we can't afford?"

Don't go into debt making your short film.

You've got a production budget, remember? Stick to it!

But if you know there's money coming in - from a crowdfunding platform, perhaps or from your excellent film business plan - and you've got to spend some of it before it arrives to pay for a casting space, perhaps a credit card may help you through that gap.

Do what you have to for the first one..watch more on this:

If you do decide to include a credit card in your arsenal of payment methods, try to keep it separate from your personal use credit card.

Also, pay your credit card bill from your short film's primary bank account. The one where your production's funds are stored.

It’s likely you’ve heard various tales of how to make a successful short film by maxing out credit cards.

It’s one of those sorts of romantic Hollywood stories that seems to float around.

A producer with nothing leveraged everything to make a film...

Then made it all back ten-fold.

Sure sounds like a good story. Surely it’s happened now and then. The more likely outcome of maxing out credit cards is creating debt you can’t pay off. 

Those who know how to make a successful short film know that success can be defined as breaking even or just having a responsible management of your funds. Use the tools you have at your disposal to plan carefully. This can a production calendar or a script breakdown, (we'll touch on this later), and even storyboards.

The better your planning, the more likely you’ll find success, save money, avoid headaches, nightmares, and get future work.

If you want to know how to make money with short films, you’ll need to know how to do all these other things. 

2.4 Digital Payments

PayPal, Venmo, and others

On more and more indie productions, I'm seeing digital payment tools replace paper checks for payments to cast and crew.

If you like these, then, by all means, use them! But remember:

• Set up your digital payment account in advance. 
• Try to have just one, to keep your financial tracking and film production accounting easier.
• If you must have more than one digital payment account, link it only to your primary production account.

Ultimately, all of your production expenses should draw from one central account.

2.5 PETTY CASH

Watch your cash

When you made your short film budget, hopefully, you included some expenses that you will handle with petty cash.

These types of expenses could be food, gas, or various expendables.

Petty cash should always come from your primary production account and not from whatever stash of money you happen to have in your wallet.

When you withdraw cash from your account, remember that this is not an expense yet.

Only the things that the petty cash is used for are expenses. Keep it in an envelope, separate from your own personal money. Traditionally, petty cash envelopes are printed with a basic accounting chart.

Everyone who takes petty cash needs to fill that chart in:

- How much money was taken?

- Who took it?

- How much was spent (and on what?)

- How much was returned to the envelope?

When remaining cash is returned to the envelope, it must be returned with receipts. Make sure to have a petty cash sign-out sheet, too. 

Everyone who handles petty cash must sign it out and sign it back in on this form. In this way, you can monitor not just how much cash is being spent, but who's doing the spending. 

Plus, if the petty cash doesn't return to you at the end of the day, you know who was last responsible for it.

At the end of each shoot day (or more frequently, if possible), note your petty cash transactions in your accounting ledger.

When you're finished with production, re-deposit the remaining petty cash into your primary account.

Want to make a successful short film? Track every expense and keep an organized paper trail.

3.1 ACCOUNTS

Put everything in its place

At this point, you’ve got your short film budget already made. You've got your accounts set up so you can spend money. 

But before you spend, you've got to set up your accounting system so you can track how much you're actually spending.

At its most basic, an accounting system is just a list of what you paid for, when you paid for it, and how much it cost.

For very inexpensive short films, this might suffice.

But to really track your expenses, you've got to identify one more critical piece of information about every expense:

Which account does it belong to?

When you learned how to budget a short film, you learned to sort your expenses into categories that are called "accounts".

These are not the same thing as bank accounts, even though the same terminology is used.

Your production budget accounts are numbered, which gives you an easy way to reference them in your accounting.

If you learned how to make a budget for a short film any other way, try and incorporate using account numbers now.

In my production budgets, the camera department is usually account #22-00.

When I record a transaction (camera rental, for example), I'll note the budget account number (2200) along with the transaction.

If I'm being particularly detailed, I'll tie the transaction to a budget sub-account.

22-07 is "Camera Package" in my budget.

So I'll note budget account 2207 when I record this transaction.

It's not going to be clear why this info is so important until you take the next step: actualizing your production budget.

But first…

3.2 ESTIMATING

Begin with the short film budget

The importance of creating and tweaking your budget cannot be overstated.

You can’t learn how to make money with short films if you don’t start with the budgeting process.

The better you understand the process of creating a budget, the easier it’ll be for you to take care of your money, and start to make money with short films. So start with breaking down your script.  If you need a primer, here you are:

Though you're probably well versed in script breakdowns, it's helpful to use a software that has the capabilities to identify each element needed in the scene as clearly as possible. StudioBinder's script breakdown feature makes it so simple.

In many instances, a completed short film serves as something of a “calling card” for the team behind it. Short film script ideas are often expanded into features, depending on the success of the short.

Agencies and production companies will have an easier time sending people to short film festivals to scout out emerging talent, simply because viewing a program of shorts is less time consuming than features. 

There are MANY industry folks who make time to attend Los Angeles based short film festivals - so keep those ones in mind!

All of these possible outcomes for your short film depend on you finishing it though. Few people are interested in examples of short film scripts.

They want to see what you can put on the screen.

And that will depend on how accurate your budget process is, and if you can stay within those parameters. More on this:

That process is where the rubber meets the road when it comes to how to make short films.

Watch our video below on how to work with an indie budget.

When it comes to learning how to budget a short film, the same principles for budgeting and film and video production for features apply.

3.3 ACTUALIZING

The facts about the production budget

When it comes to making your budgeting and accounting useful, actualizing is the most important step. But, what does it mean?

It means comparing your anticipated expenses (your budget) with your actuals (how much you actually spent).

Think of it as having a living budget as you go.

Production budgeting software will automate the actualization process for you, as long as you accurately assign budget accounts to your transactions.

If you don't have production budgeting software that can do this, you might need to manually actualize your budget. Watch and see how this filmmaker did it:

Start with a list of your budget accounts and their totals.

So, how much were you planning to spend for each budget account?

Next, go through your transaction list and add up the transactions for each budget account.

The result?  Your actualized budget. This document tells you exactly how much you've spent over or under your total projections.

If you discover that some departments have come in under-budget, you can reallocate their unused resources to other departments that need them.

You can also use your actualized budget to identify departments that are over-spending before they break the bank.

So maybe it’s time to bring the DoP in for a meeting about how much he’s asking for that dolly and lighting package.

It can take a lot of work to actualize your budget every day.

For my own productions, StudioBinder's budget template has been vital. You need something that reads your account ledger, adds up the data, and gives me budget actuals. 

It's not as elegant as accounting software, but it's certainly less expensive.

And of course, finding effective ways to get the same job done while saving money. That’s the primary goal when shooting for how to make a successful short film.

Take a look at how some filmmakers do it with practically no budget.

Regardless of your budget, the more disciplined you are with it, the easier your life is before, during, and after the production.

3.4 FISCAL SUCCESS

Be disciplined with a short film budget

Being disciplined is a good rule of thumb in general. It applies to making short films, too, both in maintaining all of this data and the discipline of knowing how to act on it.

Financial looseness isn’t a luxury afforded on low budget films, and shorts, invariably, are low budget films.

There is no studio to fall back on, no cushion to catch you if you overspend.

And the big secret is that studios will pinch pennies as much if not more than short film budgets.

Because the principles of maximizing the value and spending carefully, i.e. taking care of your money, apply across the boards.

So did you learn how to make a successful short film?

Guess what?

That means you learned how to make a successful feature film.

Pulling together all of your accounting while production is still in-progress can be a daunting task. Yet it’s one you MUST do it if you are to stay in control of your funds. If you’re in control of your funds, you can steer your project to the safe harbor of completion.

No need to be like those films that went over budget...

Once you have the information that your actualized budget yields, always act firmly on that information.

If you can’t afford something, you can’t afford it.

Don’t spend now and assume you’ll figure out how to pay for it later.

The buck (and the bucks) stops with you.

When it comes to your production's money, always know where you stand.

There are TWO principles that will help you do this:

Simplicity and Organization.

- Simplicity: Have as few accounts as possible, and draw your production's funds from only one source.

- Organization: Record every transaction in a way that will give you the data that you need.

If you can keep the flow of money smooth and stable, you will eliminate a major source of friction and instability on any production type.

UP NEXT

Essential guide for crafting a budget

Now that you know the fundamentals of fiscal responsibility for your project, it’s time to put it into action. Let's learn to craft a budget.

It's best to use a template to start budgeting your short. Read on for a more detailed guide on budgeting at any level.

Up Next: Craft a Film Budget →