Film Finance: Let’s Talk Numbers

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Creatives often find the world of finance and insurance challenging to navigate. Experts in these fields get the conversation started. Susan Reynard reports.

Film financing and insurance are big, complex topics. However, with some understanding, preparation and knowing when and with whom to have the right conversations, filmmakers can successfully navigate the all-important funding aspect of their creative projects.

Forex and funding

Gerswhin Arendse, Business Development Manager at RMB, says conversations with his film clients start with assessing what they want to do; how they want to do it; analysing the flow of offshore funds, budgets, expenditure and time-frames; and discussing suitable hedging structure solutions. Large, established clientele usually have a team of experts on board to manage this process. Gerswhin says RMB has a good market share of smaller, independent and up-and-coming producers and filmmakers working on smaller scale productions.

Film Finance

“Filmmakers have budgets in their local currency. If they have the offshore funding they need to manage their risks. The South African rand is one of most volatile currencies in the world so if they’re budgeting for money coming through in different currencies they need to get exactly what they need, not less,” he notes.

“Banks over the last few years have been very risk averse and if they do get involved in financing a film project it will not be for 100% of the budget. Credit criteria are very strict and finance depends on distribution, marketing, actors, genre and much more, all of which impacts risk,” he explains. Many of Gerswhin’s film clients are local companies doing film and commercials on behalf of international clients. Analysing and eliminating the risks of falling short on a budget due to foreign exchange fluctuations or lack of sufficient forward cover is his speciality.

Conversation starters

“We as a bank are trying to talk to creative people who may not have a financial background to inform, guide and assist them in making good business decisions. We assist with preparing financials and budgets, explain the various products out there and manage their risks,” Gerswhin says.

“RMB and FNB hosted film finance workshops in partnership with Wesgro in 2016 and 2017. Financial experts in different areas addressed about 90 delegates at a time, educating them on different aspects of film financing, accounting, the Department of Trade and Industry’s (dti) rebates, forex and exchange control. The feedback we got was phenomenal and there is demand to do it again. That is how we as a bank reach out to the film industry in addition to our meetings with individual clients. As a bank we want you to feel understood as a film industry,” he explains.

Continue reading about the finances in film, read Issue 11:

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