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How Digital Spend Management Solutions Are Helping the Film Industry to Mitigate Financial Risk 

In the world of filmmaking, budgeting is more than just numbers. It’s an art – and a high-risk one at that. There’s a hero in the midst though – a new breed of digital platforms designed to deliver the ultimate in spending control and financial efficiency... 

Ask anyone in the business and they’ll tell you that mastering the art of film financing is akin to winning a coveted Best Picture Oscar. A steep increase in average production costs and a persistent decline in traditional income sources from cinematic distribution only compound what was already a challenging budgeting balance act.  

Film production is a complex endeavor that involves coordinating a myriad of resources, from talent and equipment to post-production facilities. Each of these elements incurs costs, and without careful management, expenses can spiral out of control, jeopardizing the entire project. This is before considering these elements will often occur in different locations across the globe, adding the challenge of cross-border payments and foreign exchange rates to the mix.  

In this post we look at the most important considerations in managing film production costs, the biggest challenges, and the best practices that digital solutions like those offered by Qorbis enable.   

Spend management encompasses the processes and strategies employed by companies to control and optimize their spending. In the film industry, where budgets can soar into the millions, effective spend management is essential for several reasons: 

  • Budget Adherence: Film projects typically operate on tight budgets and strict timelines. Effective spend management ensures that expenditures stay within budgetary constraints, preventing cost overruns that can derail the project. 
  • Resource Optimization: By efficiently allocating resources, from crew members to equipment, companies can maximize productivity and minimize waste. This includes negotiating favorable deals with vendors and leveraging economies of scale. 
  • Risk Mitigation: Uncontrolled spending can introduce significant financial risks to a film project. By implementing robust spend management practices, companies can identify and mitigate risks before they escalate. 
  • Transparency and Accountability: Clear financial oversight fosters transparency and accountability within the production team. Stakeholders can track spending, identify areas of inefficiency, and make informed decisions to optimize resource allocation. Transparency also extends to expenses, which are increasingly a source of frustration for financiers due to fraudulent claims. 
  • FX Mitigation: The global nature of the industry means that fluctuations in exchange rates can significantly affect the cost of production, making it imperative for companies to manage currency risk effectively to stay on budget. 

Managing spend in the film industry comes with its own unique set of challenges: 

  • Complexity of Expenses: Film production involves diverse and often unpredictable expenses, including salaries, equipment rentals, location fees, special effects, and post-production costs. Managing these varied expenses at all hours and across borders requires a digital solution that is accessible anytime, anywhere. 
  • Dynamic Nature of Projects: Film projects evolve rapidly, with changes in script, shooting locations, and creative requirements. Adapting spending plans to accommodate these changes while maintaining budgetary discipline is a constant challenge. 
  • Vendor Relationships: The film industry relies heavily on relationships with vendors and service providers. Negotiating favorable terms and ensuring timely payments while maintaining these relationships is critical for long-term success. 
  • Data Management: With multiple stakeholders and numerous financial transactions involved, data management is crucial. Accurate and up-to-date financial data enables informed decision-making and effective cost control. 

To overcome these challenges and maximize efficiency, film production companies can adopt several best practices: 

  • Develop Detailed Budgets: Create detailed budgets for each project, covering all anticipated expenses. Factor in contingencies for unexpected costs, FX fluctuations, and regularly review and update budgets as the project progresses. Qorbis enables the production company to have granular control over all expenditure in real-time – whether that’s topping up an account to cover an unexpected cost, freezing a lost card or viewing transactions as they occur. 
  • Centralize Spending Authority: Establish clear lines of authority for spending approvals to prevent unauthorized expenditures. Centralizing spending authority ensures consistency and accountability across the production team. The Qorbis platform allows tiered control of accounts, with dollar and category limits able to be set in real time in bulk or on a case-by-case basis.  
  • Leverage Technology: Invest in specialized software and tools for financial management and tracking expenses. Qorbis solutions to deliver your team a toolbox that they can use to streamline processes and auditing, provide real-time controls, improve data accuracy, provide real-time insights into spending patterns. 
  • Negotiate Vendor Contracts: Negotiate contracts with vendors to secure favorable terms and pricing. Establishing long-term relationships with reliable vendors can lead to cost savings and enhanced collaboration. 
  • Monitor and Analyze Spending: Regularly monitor spending against budgetary targets and analyze variances to identify areas of overspending or inefficiency. Adjust spending plans as necessary to stay on track. With Qorbis, see spending as it happens and close the books every day rather than risking month-end surprises that threaten to derail budgets.   
  • Utilize Smart Expense Management Tools: Even the best expense tools need to be supported by policies, so first, develop clear expense policies outlining acceptable spending practices and reimbursement procedures. Educate employees and contractors on these policies to ensure compliance. Digital solutions like that offered by Qorbis replace outdated pay-and-claim models, reducing fraud and processing times and giving finance teams real-time spend visibility. Virtual Visa debit cards can be issued to crew instantly, with spend limits and categories able to be set and amended in real-time via the administrative dashboard. Crew members can then upload receipts in app, which are then automatically categorized and collated to make reconciliation easy.  
  • Hedge Currencies: Using financial instruments like forward contracts to hedge against adverse currency movements when entering into international agreements and dealing with foreign currency transactions can help minimize risks and reduce costs. With a Qorbis account, FX fees are kept low with an average net FX and forward margin of 0.5%. 
  • Choose Multi-Currency Accounts: To streamline currency exchange and transfers, film production companies can benefit from multi-currency accounts to receive payments from overseas partners. With Qorbis multi-currency accounts, users get real-time access to multiple currencies, simplifying the process and enhancing operational efficiency. This means being empowered to make informed decisions swiftly, reducing the potential negative impact of currency risk. 
  • Silo Each Project into Separate Accounts: Streamline accounting by choosing a solution that allows each production or project to be treated as a separate P&L. Qorbis segregated accounts allow a production company to silo each production into separate P&Ls, delivering greater control, visibility, flexibility, and enhanced accountability. 

Qorbis understands the unique challenges faced by the film and television production industry. We’ve designed our specialized spend management solutions to meet these needs and deliver time and cost savings so that you can get your project completed on time and on budget.