Film Accounting Glossary
Distributor advance
What is a distributor advance?
Also called advance against receipts.
A distributor advance is money paid by a distributor before delivery, in exchange for rights, that the distributor recoups from the receipts of that release.
Independent productions use advances and presales as collateral for a production loan, so the advance's certainty and the distributor's creditworthiness matter as much as its size. Until the underlying revenue is earned, the advance is a liability on the production's books.
Example
A distributor pays $900,000 on delivery for a territory, and the production borrows against that contract to fund the shoot. The lender's security is the distributor's covenant, so the buyer's creditworthiness matters as much as the amount.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
The financing plan and the collateral package for a production loan. A liability on the books until the underlying revenue is earned.
Common mistake
Sizing a loan on the advance alone. The lender is underwriting the distributor's ability to pay, so a large advance from a weak buyer supports less than it appears to.
Related questions
- When is a distributor advance paid?
- Commonly on delivery and acceptance of the picture, which is why the deliverables list becomes as tightly tracked as the budget itself.
- Can a production borrow against a distributor advance?
- Yes, and it is standard on independent films. The lender advances against the contract at a discount reflecting collection risk, timing, and the buyer's credit.