Net 30 and Getting Paid: Cash Flow for Production Companies

You can have your best quarter on paper and still not make payroll. That is not a contradiction. It is the single most misunderstood thing about running a production company, and it kills more shops than a bad reel ever will. Profit is what is left after the year is done. Cash is what is in the account on the Friday crew expects to be paid. The two are not the same number, and the gap between them has a name in the shipping business that fits ours just as well: the float.

Here is the shape of the problem. You shoot a $40,000 branded piece. You collect a deposit at signing, you pay your crew and your rental house within a week or two of the shoot, and you deliver the final cut about five weeks after you started. You invoice the balance on delivery. The client pays net-30. Do the arithmetic on when money actually moves and you will find that you were out of pocket, real dollars gone from a real account, for well over a month on a job you were never going to lose money on. Multiply that by three overlapping projects and the question stops being "am I profitable" and becomes "do I have enough cash to reach the day the checks land." Those are different survival tests, and the second one is the one that shows up first.

What net-30 actually means

Net-30 means the client agrees to pay the full invoice within thirty days of the invoice date. It does not mean thirty days from the shoot, thirty days from delivery, or thirty days from when you did the work. It starts from the date printed on the invoice, which is why the fastest cash-flow improvement most production companies never make is simply invoicing the day of delivery instead of at the end of the month.

The more important thing to understand is that net-30 is a ceiling, not a schedule. Almost nobody pays on day one. On a healthy commercial account you will see payment land somewhere between day 25 and day 35. On a slow account, or one routed through a procurement department or an agency's accounts-payable queue, net-30 quietly becomes net-45 or net-55 in practice. The finance term for this is days sales outstanding, or DSO, and it is the number that actually governs your bank balance. Your contract says 30. Your real average might be 42. That twelve-day gap is not a rounding error. On a $30,000 receivable it is nearly two weeks of your money sitting in someone else's account, and you are the one financing it, interest-free, whether you meant to or not.

Longer terms are common on larger jobs and with larger clients. Agencies frequently work net-45 or net-60, and enterprise clients sometimes push net-90 as standard boilerplate. A net-60 term does not make the client a bad partner. It makes them a client whose float you need to plan for before you sign, not after you deliver.

The costs hit before the money does

The reason the float hurts is that your costs are front-loaded and your revenue is back-loaded, and nothing about the standard payment cycle fixes that mismatch.

Walk the timeline of a single job. Pre-production burns time and some hard costs. On the shoot, your biggest outflows hit almost at once: crew rates, gear rental, location, catering, insurance riders. Freelance crew increasingly expect to be paid quickly, often net-15 or faster, and the good ones remember who is slow. Rental houses want to be settled at return. So the bulk of your direct costs, frequently 55 to 70 percent of the project total, leaves your account within a couple of weeks of production. Then you edit. Then you deliver. Then you invoice. Then you wait out the client's terms.

Line it up and the sequence is brutal in exactly one way: the money you owe other people moves out early, and the money you are owed moves in late. The distance between those two events is the float, and during it your balance on that job is negative even though the job is profitable. A profitable job can still put you underwater for six or eight weeks. Three profitable jobs stacked on top of each other can put you underwater deep enough that a single slow-paying client tips the whole account red. That is how a good year sinks a good company.

Why deposits exist

A deposit is not a formality and it is not a trust gesture. It is the single most effective tool you have for shrinking the float, and the math is direct: every dollar you collect at signing is a dollar you are not financing yourself until the client pays.

The standard structure in commercial production is a 50 percent deposit at signing with the balance due on delivery. On the $40,000 job, that is $20,000 in the account before you spend a dollar. If your direct costs run around $25,000 and most of them hit near the shoot, that deposit covers the large majority of your outlay and holds your worst dip to a few thousand dollars instead of the full cost of the production. The deposit does not change your profit. It changes whether you can afford to reach payday, which at the moment of writing crew checks is the only question that matters.

Smaller and newer clients sometimes push back on 50 percent. There is room to negotiate the number, less room to negotiate the principle. A production company that fronts 100 percent of a project's costs and waits net-30 to net-60 to be made whole is running an unsecured, interest-free loan operation on the side, and it is doing it with money it does not have. If a client cannot put anything down, that is information about the client's own cash position, and their cash problem should not quietly become yours.

Progress billing on the bigger jobs

Deposits solve the float on small and mid-size projects. On the larger and longer ones, the deposit alone is not enough, because the timeline stretches and your costs pile up in the middle. That is what progress billing is for.

Progress billing, sometimes called milestone billing, breaks the total into scheduled payments tied to points in the production, not to the finish. A common shape on a substantial job is something like 40 percent at signing, 30 percent at the start of principal photography, and 30 percent on delivery. The details flex with the project, but the intent is fixed: pull the client's money forward so it arrives closer to when your costs are actually incurred, instead of all of it waiting behind a single net-30 clock at the very end.

The effect on the float is significant. A $150,000 project billed as one lump due net-30 after delivery can leave you carrying an enormous negative balance for two months. The same project on a 40 / 30 / 30 progress schedule keeps your cash position close to flat the entire way through, because each tranche lands near the costs it is meant to cover. You do the identical work for the identical total. You simply stop lending the client six figures for a season. Write the progress schedule into the contract, tie each payment to a defined and verifiable milestone, and invoice the moment each milestone is hit.

When you have to finance the float anyway

Even with disciplined deposits and progress billing, growth creates float. Taking on more and bigger work means more money out before more money in, and at some point the gap is larger than your cash cushion can absorb on its own. That is not a failure. It is the normal tension of a scaling production company, and there are real tools for it.

A business line of credit is the standard answer and the cheapest one. You draw on it to cover the dip, you pay it back when the client pays you, and you carry interest only on what you use for the days you use it. The cost is modest relative to the alternative, and the alternative is turning down work because you cannot float it. Invoice factoring, where you sell a receivable to a third party for most of its value now and they collect the full amount later, is faster to access but meaningfully more expensive, and it can signal to clients that your cash is tight if they end up paying a factor instead of you. Both beat the two genuinely bad options, which are missing payroll and financing everything on a personal credit card at consumer interest rates.

The point of naming the cost is that the float is never free. Someone always pays to carry it. If your terms are loose, you pay, in interest or in the opportunity cost of cash you cannot deploy. If your terms are tight, the client pays, by funding more of the work up front. The entire discipline of production finance is deciding, on purpose and in the contract, which of you carries the gap and for how long.

The takeaway

Being busy is not the same as being solvent, and a full calendar can hide a cash problem right up until the week it does not. The production companies that last are not the ones with the best cameras or even the best year. They are the ones that treat the timing of money as a first-class part of the deal, negotiated as deliberately as the rate.

So structure for it before you sign. Take a real deposit. Put progress billing on anything large or long. Invoice the day you deliver, not the end of the month. Know your true DSO, not the number your contract wishes were true. And line up a source of cheap credit before you need it, not during the week you already do. None of that changes how good the work is. It changes whether you are still around to make the next piece, which is the only measure of a production company that the bank actually counts.