The below is a sponsored post. Interview conducted by Kathleen Finn.
In this interview, John Finn, CEO and founder of IndiePay, an entertainment payroll company and JFA, a production accounting firm, talks about first-time filmmakers’ budgets and his aversion to triplicate carbon-copy timecards.
Q: A first-time filmmaker is focused on the big picture and doesn’t necessarily have experience with the finer points of budgeting. Tell us about the easy-to-miss details producers can be aware of that will keep them on budget.
A: Cost overruns can add up to big budget sinkholes. Make sure to budget for gas, shipping, messengers, allowances for realistic overtime, and loss and damage on rentals. These will come up during the course of your production, yet are often ignored or underestimated. These add up. Another big budget area that needs attention from the get-go is payroll – in particular fringe payroll costs and union Pension and Welfare (P&W). These figures can be easily miscalculated. If you don’t budget for the correct costs at the start, you will have to draw the funds out of another part of your budget. Know what your labor (and payroll) costs are up front and you won’t take a budgetary hit later on.
On the labor front, be choosy about who you hire. It sounds elementary, but if you are tempted to cut costs by hiring the cheapest labor possible, you will also pay for it in the long run. It might be tempting to bring in an inexperienced line producer or a non-union laborer to keep the labor costs low. Yet the true costs associated with having to replace an inexperienced employee or making up for a lack of quality in other ways can reverberate through your budget. Beware of spending too little on key personnel.
Q: You note a shift in the traditional payroll model within the entertainment industry. Can you comment on IndiePay’s role in this shift?
A: Payroll companies are releasing their firm grip on the Employee of Record (EOR) model, and are shifting toward giving the producers the mantle of EOR. This is a direct result of IndiePay being the first to offer that model, which we have dubbed the IndieModel.
IndiePay recognized that payroll companies could handle the administrative duties required of production. And that by making a simple shift in legal terminology and paperwork the producer becomes the Employee of Record. Hence, the IndieModel was born. When the production company becomes the EOR, this enables the producer to reap thousands of dollars in savings. In the traditional EOR model, payroll companies can all too easily inflate payroll fringe and worker’s comp rates. Traditionally, producers have shied away from EOR due to the purported added risk and administrative burden of being EOR. Yet that has proved fallacious.
The IndieModel makes a lot of sense for producers and payroll companies. We set the precedent back in 2006, and now it is considered a fairly common occurrence — it’s less strange to producers to become the EOR.
Q: In your opinion, what does this shift to producer as EOR mean for the entertainment industry as a whole?
A: The industry as a whole is a winner because monies are directed toward the creative process – what ends up on screen. The IndieModel’s arrival on the scene has also shattered the myth that somehow producers are more protected from liability if the payroll company is the EOR. A producer is liable regardless. As long as you have insurance in place you are protected regardless of EOR status. If negligence is involved, you can’t hide. The producer bears the ultimate responsibility.
Q: Can you comment on other notable shifts in entertainment finance?
A: Bundling of services is a burgeoning shift, as producers, insurance companies, accountants, and payroll companies are looking for efficiencies across the board. Insurance companies are combining producer packages with worker’s compensation or bundling producer packages with bond insurance. This makes sense to sweep it all together. Accounting and payroll is another obvious bundling scenario – something we do and the reason IndiePay was created – it made sense to offer payroll services as an adjunct to our JFA accounting services.
Looking ahead, I hope that the entertainment industry takes advantage of the available technology to streamline the finance side of production. Productions still use triplicate carbon copy timecards. Paperwork could be cut drastically with a paperless electronic workflow. For example, the location department can put in a check request, send it to the line producer who sends it on to accounting for processing. Similar to package tracking, this can let people know at any stage where the payment is in the approval process. This would rid us of the triplicate form, messengering paperwork, the 3-day waiting period between the timecard being filled out and the paycheck being paid. Let’s use the technology – I-pads, Smartphones, etc. — that’s out there to streamline and clean up the processes that get people paid and bills settled.
Q: What is the best part of your job?
A: Being a part of a creative industry and seeing the direct results of my work. Helping to get a film or television project wrapped up on the financial side is satisfying. I enjoy working on real and authentic projects as opposed to the smoke and mirrors of the corporate accounting world. And, I get to work in a vibrant, exciting city – one of the best in the world.