Film Accounting Glossary
Hard cost
What is a hard cost?
Also called hard money.
A hard cost is money that actually leaves the production account for goods, services, and labor, as distinct from soft money like tax credits, deferments, and contributed services that reduce the cash requirement without being spent.
Lenders and guarantors focus on the hard cost of a budget because that is what has to be funded in cash and on schedule. A budget with a large soft-money component can carry real cash risk even when the total looks fully financed.
Example
An $8.4M budget with a $2.1M tax credit and $400,000 of deferments has $5.9M of hard cost that must be funded in cash, on schedule. A lender sizes its exposure on the $5.9M, not the $8.4M.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
The distinction a lender and completion guarantor care about most, because soft money arrives late and deferments may never be paid at all.
Common mistake
Sizing a picture on the budget total rather than the hard cost. Soft money reduces the eventual net cost but does not fund the shoot when the shoot needs funding.
Related questions
- What is the difference between hard cost and soft money?
- Hard cost is cash that must leave the account for goods, services, and labor. Soft money is incentives, rebates, and deferments that reduce the net requirement later.
- Why do lenders focus on hard cost?
- Because that is the amount which has to be available in cash, on schedule. A budget heavy in soft money can still fail on timing.