Cash-Flowing

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Suppose you want to run a lemonade stand, and you already have enough saved allowance to buy the lemons, sugar, and cups yourself. You do not need to wait around for a loan from your parents to arrive before you can get started. You just pay for things yourself as you go, and skip all the waiting and paperwork that borrowing would involve.

That is the idea behind cash-flowing a movie. It means a production company uses Cash it already has on hand to pay for the movie's Costs, like the crew, equipment, and locations, as those bills come due, rather than waiting for a loan or an investor's payment to land in the bank account first.

Why productions need to do this

Movie financing often arrives in pieces, and sometimes slowly. A bank loan might only pay out after certain paperwork clears, and a promised tax rebate might not arrive until long after filming wraps. But the crew still has to be paid every single week no matter how slowly the financing is moving. A company with enough of its own cash can step in and cover those costs immediately, then collect the money it is owed from the slower financing sources later on.

Fun facts

• Only companies or financiers with deep enough pockets can cash-flow an entire movie themselves, which is one advantage a large studio has over a smaller, independent producer.
• Government tax credit programs for filmmaking are a common reason productions need to cash-flow costs, since the rebate check usually does not arrive until well after the money was already spent.
• Being able to cash-flow a production can make lenders more comfortable extending a loan, since they know the production will not grind to a halt while waiting on their money to arrive.