Film Accounting Glossary
Shortfall
What is a shortfall?
Also called funding shortfall, or gap in funding.
A shortfall is the gap between what a production needs and what it actually has, whether in a specific funding tranche or across the whole financing plan.
Shortfalls are covered by contingency, by reallocation, by additional financing, or by cutting scope, and the order in which those are considered says a lot about how a production is run. On a bonded picture, an uncovered shortfall is what triggers the completion guarantor's obligations.
Example
Week six is $340,000 over with $180,000 of contingency left. The order of resort is reallocation first, then contingency, then additional financing, then cutting scope. On a bonded picture an uncovered shortfall is what triggers the guarantor's obligations.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Identified in the cost report, addressed in the variance report, and escalated to the financier or guarantor when it exceeds the remaining contingency.
Common mistake
Escalating only once contingency is exhausted. Financiers and guarantors would rather see a projected shortfall early than a confirmed one late.
Related questions
- How is a production shortfall covered?
- In order: reallocation from identified savings, then contingency, then additional financing, then cutting scope. On a bonded picture the guarantor is next.
- What happens if a bonded film has an uncovered shortfall?
- It triggers the completion guarantor's obligations, and the guarantor funds the finish while taking a senior recoupment position and often control of the production.