Cash Flow

A cash flow is an important tool that will help you make sure you have the money in the bank when you need it. You need to make sure that you have enough cash in the bank to pay people and companies when payments come due. A cash flow can help you predict when you’re going to run out of money so you can make a plan to either negotiate delayed payment terms to vendors (the people you pay) or ask for a loan from the bank or a generous family member or friend.

There are five parts of a cash flow to keep in mind:

1. Opening balance

If you haven’t spent or received any money related to your project yet, your opening balance is going to be zero. If you are going to be producing from your bank account, you will (hopefully) already have cash in that account. However, for the purposes of the cash flow, we are only concerned with the money directly related to the project. If you have an opening balance in your bank account – that is your personal funds, and not related to the project, so don’t include that in your cash flow.

2.  Timeline

Here you can fit the timeline that fits your needs. Some cashflows run monthly, but if you’re dealing with a short period of time, a weekly schedule may be more helpful. Be sure to note the weeks when significant events are happening – like rehearsals, performances, important delivery dates. This will help when entering the money coming in and going out.

3. Money coming in

This section can be relatively straightforward. Look at the funding contracts you’ve signed and there will likely be a payment schedule listed. Enter the payments for the times listed in the schedule. If the payment schedule lists $10,000 received upon signature of agreement and you sign the agreement on Jun 1, enter $10,000 cash in on Jun 7th (let’s allow some time for payment). If you’re expecting cash sales from box office – enter those projected sales for pre-sales times as well as sales throughout the run of the show. The total money coming in over time should equal the total budget for the period.

4. Money going out

This is the most complicated part and hardest to predict. This is where you will enter the expenses you expect to pay when you need to pay them. If you need to place a deposit of $1,000 for a venue rental 2 weeks before opening night, and opening night is June 1, you would enter an outflow of $1,000 on May 15th. For small productions, unions may require that you pay them a bond fee in advance (to guarantee that you will pay the actors) and that can be a huge cash drain. Be mindful of contracts you’re signing with your crew and cast and see when they would require payments. If you are purchasing supplies on your credit card, that may give you some time before you need to pay off the credit card, but be mindful that you may need to pay off a portion of the bill ahead of time, if you are reaching your credit card limit. Make sure that the total of your expenses matches the total costs you’re budgeting for.

5. Ending balance

This line is calculated by adding the period opening balance, plus money coming in, less money going out. If at the end of Week 1, you’re left with $15,000 in your balance, that $15,000 then becomes the opening balance for Week 2, and so on. On your first pass of the cash flow, you may find that your balance is negative during certain time periods. If this is the case, look at what costs you are spending and see if you can pay the people or the companies later, when you have more money coming in or if you can get a loan to cover your expenses for that time period. The last person that usually gets paid is you, the producer, so you will normally delay your payment until the final payments for the project come in.


Template & Summary

If there’s anything for certain, it’s that cash flows will never turn out exactly as predicted. You may want to go in and update your cash flows after some time has passed and update your forecasts based on the cash flows that occurred in the past. Preparing a cash flow will appear daunting at first – but with more practice and exposure, the process will become easier and maybe even somewhat enjoyable.

Click the link to automatically download an Excel template to help you create your own Cash Flow:
Cash Flow Template

Cash Flow Worksheet



Created by kpalm. Last Modification: Thursday March 26, 2020 14:27:31 EDT by kpalm.