A budget is an amount of money that is allocated to a project.
As a producer you may be required to manage the budget for a project, ensuring that you have enough money to pay for all the people, resources and equipment you need to get the job done.
It is important to ensure that the use of the budget is planned carefully, if you run out of money towards the end, the project may not get finished meaning it can’t earn anything to pay back the investors. If the person or company that is financing the project doesn’t earn any money, then they won’t pay you to undertake the next project.
Cashflow is different to a budget, in that it takes into account any money that comes in.
For example, if you are running a recording studio you need to ensure you always have enough money to pay the staff and any bills such as electricity, air conditioning and rent.
While these expenses are going out, some money will hopefully be coming in from people hiring the studio.
A cashflow spreadsheet will keep track of how much money is in the bank at any given moment, taking into account the money going in and out each day.
Cashflow is what kills poorly managed companies. If they don’t have any money in the bank at the point in time when they need to pay the bills, then they may go bankrupt, even if they are profitable overall.
Company turnover is the amount of money that is earned in a year. It doesn’t take into account any expenses.
Any costs that needs to be paid by the company such as wages and bills.
Company profit is the amount of money that is left when the expenses are subtracted from the turnover.
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