Film Accounting Glossary
Escrow account
What is an escrow account?
Also called escrow, or restricted account.
An escrow account is a restricted bank account held by a neutral party and released only when defined conditions are met.
Productions use escrow for residuals reserves, for holdbacks against delivery, for location damage deposits, and for post-production funds a guarantor wants ring-fenced. Money in escrow is not available cash, so it has to be excluded from the working cash position.
Example
A distributor holds $250,000 in escrow against delivery, and the show separately ring-fences $180,000 as a residuals reserve. Neither amount is available cash, so both are excluded from the working cash position even though the bank shows them.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Held by a neutral party and released on defined conditions. Reported separately from the operating account for exactly that reason.
Common mistake
Counting escrowed funds in the working cash position. The bank shows the money; the production cannot spend it until the release conditions are met.
Related questions
- What do productions hold in escrow?
- Residuals reserves, holdbacks against delivery, location damage deposits, and sometimes post-production funds a guarantor wants ring-fenced.
- Is escrowed money available cash?
- No. It is restricted until defined conditions are satisfied, so it has to be excluded from the cash position the producers make decisions on.