Why media production companies need industry accounting

Each industry has its own accounting needs. For example, retail typically requires inventory accounting, and construction needs accounting for material purchases and resales. Media production carries its own needs often overlooked by brass tacks bookkeepers. Here are a few examples:

Cash flow in production company accounting

Because production companies execute work on behalf of their clients, typically taking a markup on that work, they bring in and turn around a significant amount of cash to complete the work. For instance, they may operate with a commercial budget ranging from $200,000 to $2 million, which can wildly change their cash position at any given time. The changes may depend on the job sizes, the availability of additional cash (e.g., credit lines), and client terms from the outset.

To properly handle your production company's accounting, your accounting team should understand that a $1 million cash balance in the days following a shoot (i.e., before payroll is paid) doesn't reflect the amount of cash actually available to the business.

Project accounting for media companies

As discussed in our Why project accounting matters blog post, production companies should be able to see the money that passes through their business to understand how profitable their projects are. Although retail accounting software solutions such as OuickBooks ® can track income and costs by project, they don't enable accountants to track them against what's expected-making it very difficult to anticipate the cash coming in and going out. Without this level of analysis, you can't consistently and accurately evaluate your company's profitability.

Other media production industry needs

Additional deal structures frequently arise in the media production space; particularly, in commercial production. These structures include profit sharing on projects with talent, sales commissions, job bidding and treatment preparation, and cost-plus pricing. Typically, if your accountant isn't well-versed on your industry's unique accounting requirements, they'll inappropriately fall on your production staff.

If your media production company's accountant or bookkeeper is falling short on meeting your industry-specific needs, we should talk. Reach out to our team at Syzygy to hear more about our industry expertise that can help empower you to grow your media production company.