The Complete Guide to Commercial Production Support

Taking the reins of the back office for your upcoming commercial production will require your team to have production bookkeeping, accounting, and business skills.

From managing cash flow, reviewing the production budget, selecting production insurance, and overseeing accounting, there are many crucial functions to execute behind the scenes of your production.  

For agencies or brands that decide to bring production support functions in-house, it requires the hiring of qualified personnel. If not appropriately staffed, it can lead to a variety of challenges, including: 

• Inaccurate tracking of fund distributions.

• Delayed payroll payments. 

• Cumbersome approval processes 

• Conflict with corporate bureaucracy in managing payments and cash flow

• Reliable cost accounting for the project 

While expanding in-house capabilities is no doubt a priority for your brand or agency, taking on the overhead required to manage these functions may be problematic and expensive. It would help to be more staffed, as it can lead to hiccups. Our solution allows you to expand and contract, depending on your production levels.

This blog aims to help brands and agencies learn everything they need about managing the back-office component for commercial productions. We'll define all back-office functions, the pros and cons of bringing this function in-house, and pro tips for finding cost-effective solutions to ensure their production capabilities can scale for long-term success with production support.

What is Production Support for a Commercial?

The term "production support" might be confusing for some. What exactly is production support? For commercial productions, this includes all the back-office functions that go into making a production successful, including overseeing insurance, accounting, and third-party signatory for commercials. Here is a complete breakdown of functions included within production support: 

• Cash Flow Management 

• Insurance

• Accounting

• Issuance of Purchasing Cards and Petty Cash

• Budget Management 

• Vendor payments

• Payroll  Processing 

• Union issue management 

Having a clear understanding of navigating and managing these functions can help your team have more significant control throughout production.

How to Manage the Back Office Commercial Production Support Functions

Managing the back-office production support functions for your upcoming commercial will require a finance team to ensure your production addresses all accounting and affairs promptly— especially given the short turnaround timeline for commercials.

Here, we'll define all production support functions your team is responsible for throughout production, as well as the top challenges and solutions for each function: 

1. Cash flow management

   Managing cash flow involves ensuring your productions have payments scheduled from the brand, investor, sponsor, or distributor. It further consists of monitoring incoming funds and outgoing expenses related to production, overseeing that they match cash flow requirements. To keep an accurate budget, it's essential to ensure each payment is duly authorized, recorded accurately, and settled promptly.

   Cash Flow Challenges and Solutions:

   Here are some tips for combatting the top challenges when managing cash flow for commercial productions: 

   • Delays in payment

   Solution: Not paying your expected bills on time can lead to additional costs in the form of fees. Minimize payment delays by paying everything as soon as possible or even setting up a system to meet payment deadlines promptly.

   • Insufficient funds

   Solution: Keeping track of expenses in real-time and comparing them to your planned budget will help your team ensure you are spending the funds as planned. Negotiating with vendors for reduced costs, deals, or discounts can also help control production costs.

2. Insurance

   Protect your upcoming commercial with production insurance. There are a variety of production insurances that fit all types of film productions to protect your company from liabilities, such as:

   • Wraparound insurance policies

   • Worker’s compensation insurance

   • General liability insurance

   • Production equipment insurance

   • Errors and omissions insurance

   Production insurance protects your company from unexpected bumps, such as injury on set, delayed shoots, equipment damages, or even theft.

   Production Insurance Challenges and Solutions:

   A familiar challenge producers face is determining which insurances are suitable for their upcoming production. When navigating insurance, producers should consider the following questions:

   • Does your project have any special elements?

   • What equipment will be used for this project?

   • How long will your project take to produce? 

   These fundamental questions will assist in identifying the key project details necessary to determine the various types of insurance your production will require.

   An experienced production insurance broker on your team can help your production find the right film insurance you need for your company.

3. Accounting

   Production accounting is supervised by a specialized commercial production accountant and includes managing day-to-day bookkeeping with detailed cost reports. 

   Some essential responsibilities include:

   • Budget management 

   • Payroll management 

   • Tax compliance and insurance

   • Vendor management

   • Rendering an accurate accounting of production costs

   Production accounting dramatically differs from traditional accounting as commercials work concisely and demand a faster work environment and unique needs for each commercial.

   Production Accounting Challenges and Solutions:

   Here are some tips for combatting the top challenges when taking production accounting in-house for commercial productions: 

   • Going over budget or under budget due to an unrealistic production budget 

   Solution: Having the right production accountant on your team to track all financial records.

   • Facing a lot of red tape getting quick access to financial resources

   Solution: Large corporations and agency-holding companies need help consuming vendor approval and payment processes. Using a third-party service streamlines the process.

   • Tax compliance issues

   Solution: Hiring the right payroll company for your upcoming commercial can ensure you follow federal, state, local, and union regulations.

   • Bookkeeping issues

   Solution: A production accountant can help manage bookkeeping and prepare financial reports to track and allocate costs.rate.

4. Petty cash / Purchasing cards

   More likely than not, your upcoming commercial shoots will need some last-minute expenses. Petty cash or purchasing cards are your production's lifesaver when needing a quick last-minute purchase while on set. 

   Petty cash refers to cash on hand; typically, a production will carry a float for the duration of a project. Petty cash is a great way for your finance team to monitor how funds get allocated during production. 

   Purchasing cards function precisely like credit cards but, in this case, are termed commercial cards and allow for seamless electronic transactions while on set for your production. The use of purchase cards has many benefits, such as saving on procure-to-pay costs, efficient purchasing, and greater control and oversight of fund allocations. 

   Petty Cash / Purchasing Cards Challenges and Solutions:

   Here are some tips for combatting the top challenges associated with petty cash and P-cards for commercial productions:  

   • Long turnaround for approved funds 

   Solution: Many organizations have a 30-day minimum—approval turnaround time for funds requests.

   • Improper use of fund distribution 

   Solution: To avoid this, set clear and detailed policy guidelines on fund distribution.

   • Inaccurate tracking of cash flow

   Solution: Require purchase orders for all cash purchases.

5. Budgeting

   A commercial production budget is a detailed plan for all the associated costs that come with filming the spot. The budget includes all expenses related to the production process, such as:

   • Production costs: This includes pre-production expenses for hiring a production team, which may consist of directors,camera operators, sound technicians, editors, and other technical staff. The quality and experience of the team can significantly impact the cost.

   • Talent fees:  If the commercial features actors, models, or influencers, their fees must be considered. The prominence and recognition of these individuals can significantly influence their rates.

   • Location and set expenses: Renting a location or building a set for the commercial can be a significant expense. This includes any costs associated with permits or licenses needed to film in specific locations.

   • Equipment rental: High-quality cameras, lighting, sound equipment, and other necessary gear may need to be rented unless the production company owns them.

   • Post-production costs: Editing, color correction, special effects, and sound design in post-production can be costly but are essential for a polished final product.

   • Music and licensing fees: Licensing fees can be substantial if the commercial uses music, especially well-known songs. Original music composition also incurs costs.

   • Marketing and distribution: This includes the costs of airing the commercial on television, online platforms, or in cinemas. The price can vary greatly depending on the platform, duration, and advertisement frequency.

   • Contingency funds: It's wise to allocate a portion of the budget for unexpected expenses or changes in the production plan.

     Budgeting Challenges and Solutions:

     Here are some tips for combatting the top challenges on budgeting for commercial productions:  

   • Unforeseen costs

     Solution: Unexpected costs are likely to occur as your production continues, whether crew or talent get injured or become ill, delaying production, unexpected damages to equipment, or food and travel expenses. Hiring a line producer who is prepared for unforeseen costs will ensure your production stays within budget.

   • Inflexibility

     Solution:  If your production budget is tight during pre-production, it leaves little room for error during production and post-production. Working with a qualified line producer can ensure your production anticipates unexpected costs and other changes along the production process, allowing you to stay within budget.

6. Line production

Line producers take on a very important role in your production’s financial affairs. Your line producer is responsible for building out your production budget and hiring the ideal crew team. 

Hiring the right line producer for your team can significantly benefit your production as they make the most out of your available financial resources, for example:

• Controlling costs over how funds should be allocated during production.

• Mitigate issues and find creative solutions during production.

• Saving production costs by negotiating equipment, rental, and location fees with vendors.

• Hiring the right crew personnel and staying compliant with union contract terms and regulations to avoid added penalty fees.

Line Production Challenges and Solutions:

Here are some tips for combatting the top challenges of hiring the right line producer for commercial productions: 

• Finding a Line Producer with the right work style for your project

Solution:  Ensuring you ask for referrals, conducting interviews, and researching their previous work experience will give producers an indication of which line producer would fit best for your upcoming production.

3 Ways to Scale In-House Commercial Production Capabilities Without Overwhelming Production & Finance Teams

A growing trend in the advertising world today is expanding in-house capabilities. For example, many brands are building in-house agencies. And agencies are building production arms as they want to increase margins. However, producing more content in-house requires more financial resources to keep up with quick turnaround times for commercial productions. This can quickly result in financial resources being overwhelmed and production teams needing more appropriate commercial resources. 

To avoid being put in this position, here are three ways your company can ensure commercial productions can scale in-house without running into issues.

1. Adding to the finance department’s headcount

   Taking your back office support in-house will add more responsibilities to your finance department. And considering the fast-paced nature of commercial turnarounds, it's critical to have a dedicated function managing back-office affairs. Increasing your finance team will ensure you avoid disrupting the internal bureaucracy that's in place for your production.

2. Adding to your business affairs department

   Expanding the business affairs department is a strategic for brands or agencies looking to handle more commercial productions in-house, especially when navigating the SAG-AFTRA commercials contract. Here's why:

   • Understanding SAG regulations: SAG-AFTRA sets strict guidelines for employing its members. These guidelines cover wages, working conditions, residuals, and more. An expanded business affairs department will have the expertise to navigate these regulations effectively, ensuring compliance and avoiding legal pitfalls.

   • Talent negotiations: Dealing with SAG talent often involves complex negotiations regarding contracts, pay rates, and usage rights. Skilled business affairs professionals can negotiate these contracts to ensure fair terms for both the talent and the agency and that the contracts align with SAG rules and the project's budget.

   • Residuals and royalties management: SAG actors are often entitled to residuals - payments made for the repeated use of their performance. Managing these residuals can be complicated, requiring detailed tracking and accurate payments. An expanded business affairs team can handle these responsibilities, ensuring timely and accurate residual payments.

   • Liaison between creative and legal requirements: The business affairs department bridges the agency's creative ambitions and the legal requirements set by SAG. They ensure that innovative projects are feasible within the constraints of SAG agreements and help modify project scopes to fit these constraints when necessary.

   • Risk management: By understanding and adhering to SAG regulations, a competent business affairs department can mitigate legal and financial risks associated with non-compliance, such as fines or legal disputes.

   • Building relationships with talent agencies: An experienced business affairs team can foster strong relationships with talent agencies, which is crucial for smooth negotiations and securing the best talent for projects.

   • Educating the team: They can also educate other departments within the agency about the nuances of working with SAG talent, promoting a more informed and collaborative working environment.

   • Budgeting and financial planning: They play a critical role in financial planning, helping to budget for talent costs accurately and avoid unexpected expenses related to SAG talent.

   
   A brand or agency can face severe consequences if these functions are improperly handled. These include legal disputes and financial penalties for non-compliance with SAG regulations and potentially damaging relationships with talent and talent agencies. Such mismanagement can also lead to budget overruns, project delays, and reputational harm, ultimately impacting the brand's ability to secure top talent and successfully produce future projects. This can have a long-lasting negative effect on the brand's market position and profitability.
   
   If you’re not signed to the SAG AFTRA Commercial, hiring a third-party signatory is an excellent option to work with union talent and ensure these functions are managed efficiently.

3. Outsourcing Production Support

Another option for handling all your back-office production support needs is outsourcing. Working with a qualified finance team that’s experienced with commercial productions - such as CMS Productions - will ensure all back office functions are handled correctly and on time.

An outsourced production support function will essentially allow you to expand and contract as projects come into the pipeline. They will serve as an extension of your team to manage:

• Opening vendor accounts and issuance of purchase orders

• Invoices and disbursement management in connection with Shoot

• Production payroll, including all payroll, worker’s compensation charges, employer payroll taxes, and third-party processing fees

• Banking and insurance services as required

• Providing a P-card for the production

• Production and general liability insurance management 

• Petty cash management

• Accounting services upon completion of production (and during the production upon reasonable request)

Best of all? They are affordable compared to staffing in-house, allowing you to grow your margins for commercial productions.

Pros and Cons of Staffing Up In-House to Support Commercial Production Support

Handling in-house production affairs has many benefits, making it a viable option for advertisers and agencies. Still, there are also essential cons you should consider before deciding whether in-house or outsourcing is right for you. Here's everything you may want to consider before adding to your payroll: 

Pros of Adding to Financial and Business Affairs Headcount

• Cost effective for brands and agencies producing a lot of commercials: Having your designated team focus solely on production affairs makes the most financial sense for teams with an extensive production budget and consistently producing new content. You can avoid:

• Third-party fees

• Costs of setting up an external brief

• Cost on continuous production budget update

• Financial control: Taking your production support in-house allows for greater visibility of your finances, which in turn allows for greater power to make economic adjustments as needed.   

• Transparency:  Handling your production support in-house makes communication among teams more accessible and efficient for making decisions or updates.

Cons of Adding to Financial and Business Affairs Headcount

• Extensive bureaucratic approval process:  Large bureaucracies have a lot of red tape, making it almost impossible to accommodate resources at the same speed as productions.  

• Software compatibility problems: Incompatible software can uptick your overall production support costs. 

• Massive expense for brand and agencies only producing a handful of commercials each year: If your team isn't constantly pumping out new spots, bringing on additional overhead may not be a wise use of expenses. An outsourced provider can help you scale up or down as needed at a reasonable price.

Conclusion: Scale Without Adding to Overhead

In conclusion, deciding to take your back-office production support in-house is a big decision involving taking on many added financial responsibilities that must be handled correctly to avoid adding to your overall production budget. Staying organized and on top of all your back-office affairs will guarantee your production is set for financial success. 

CMS Productions has a qualified team of experts who can help streamline back-office production support services.

Is your team in need of our support? Contact us today to set up a call.