# Financial waterfall and cash-timing map

**Status:** planning framework; not an executed financing, distribution, or investment agreement  
**Reviewed:** September 13, 2026  
**Purpose:** connect the five-song EP and proposed five-part series to realistic cash timing, contributor protection, production decisions, and community benefit.

## Do not confuse these four things

| Layer | Meaning | Safe planning treatment |
| --- | --- | --- |
| Budget | What the work is expected to cost | Estimate and approve before commitment |
| Financing | Cash legally available to pay those costs | Count only executed, accessible funding |
| Revenue | Money the project may earn | Forecast by source and probability |
| Cash receipt | Money actually cleared and available | Spend only after receipt and restrictions check |

A signed opportunity may still pay later. A royalty statement is not cash. A forecast is not financing. A grant may be restricted to a specific program.

## Operating waterfall

This is the default order for **cash actually received**, subject to signed contracts and advice from qualified legal and accounting professionals:

1. **Identify the receipt** — payer, project, track/episode, rights type, territory, period, currency, restrictions, and statement.
2. **Remove pass-through obligations** — sales tax or amounts collected for another party where applicable.
3. **Pay transaction and collection costs** — platform, distributor, payment-processing, collection-society, currency, and agent commissions supported by statements.
4. **Fund tax and dispute reserves** — percentage set with a tax professional; do not invent one in public documentation.
5. **Pay due contributor obligations** — approved flat fees, milestones, reimbursements, and minimum guarantees according to their contracts.
6. **Apply only expressly recoupable costs** — never recoup overhead, unrelated assets, or community spending from a participant unless the agreement permits it.
7. **Distribute net receipts** — master, publishing, producer, performer, or backend shares according to the applicable signed schedule.
8. **Replenish operating runway** — preserve enough unrestricted cash to meet already-approved obligations.
9. **Allocate surplus through the capital/community decision gate** — production assets, shared facilities, access programs, or reserves.

Composition, master, performer, and producer income are separate ledgers. “One waterfall” must not collapse separate rights or redirect money belonging to another participant.

## Cash-timing ledger

Each expected receipt must include:

| Field | Required entry |
| --- | --- |
| Evidence class | Contractual / authoritative source / estimate / contingent |
| Trigger | Signing, invoice, delivery, acceptance, first use, reporting period, threshold, or other |
| Earliest contractual date | Date supported by the agreement |
| Planning date | Conservative internal date; not presented as a promise |
| Amount | Gross, currency, and whether fixed or variable |
| Deductions | Fees, commissions, withholding, recoupment, reserves |
| Restrictions | Track, episode, program, equipment, geography, age group, or none |
| Confidence | Committed / receivable / reported / contingent |
| Owner | Person responsible for invoice, registration, follow-up, and reconciliation |

## Timing assumptions by income type

| Income | What can be documented | Planning rule |
| --- | --- | --- |
| Commission/session work | Deposit, milestone, acceptance, invoice terms | Do not begin beyond the funded milestone |
| Sync/master-use fee | Negotiated contract triggers | Budget only executed minimum guarantees; acquisition interest is $0 |
| U.S. digital mechanicals | The MLC says DSPs send usage and royalties monthly and it distributes monthly | Monthly distribution does not guarantee a first-payment date; registration and matching still matter |
| SoundExchange | Electronic payments may be monthly at $100; qualifying lower balances generally follow quarterly rules | Applies to eligible non-interactive digital performances, not all streams |
| PRO performance income | Society, territory, cue-sheet, and survey dependent | Treat as delayed/variable until the relevant society confirms schedule |
| Distributor/master income | Distributor- and DSP-specific reports, holds, thresholds, chargebacks | Replace generic timing promises with the selected distributor’s current written terms |
| Grants/donations | Award and restriction documents | Do not spend before award and availability; keep restricted funds separate |
| Proposed Netflix/co-production income | None until an agreement exists | Record $0 in survival and working cases |

Sources: [The MLC — How It Works](https://www.themlc.com/how-it-works) and [SoundExchange payment frequency](https://www.soundexchange.com/faq/how-often-do-i-get-paid/), accessed September 13, 2026.

## Three planning cases

### 1. Survival case

Count only cash already available and executed near-term payments. Assume no royalties, sync fee, grant, sponsor, acquisition, or Netflix money. This case must cover contributor promises and essential operating costs.

### 2. Working case

Add signed milestone receivables using conservative payment dates. Add reported royalty amounts only when a statement exists. Keep a delay reserve for late payment, disputes, currency conversion, and thresholds.

### 3. Expansion case

Model grants, licensing, co-production, sponsorship, and earned-program revenue separately. Show probability, restrictions, decision date, and what happens if funding is late or never arrives. Never use this case to justify an irreversible commitment by itself.

## Capital and community decision gate

Before buying a capital-consuming asset, compare four paths:

| Path | Include in comparison |
| --- | --- |
| Buy/own | Purchase, setup, tax, financing, insurance, storage, maintenance, software, downtime, replacement, useful life, resale |
| Rent/borrow | Day/hour rate, deposit, transport, availability, damage risk, training, support |
| Maker/community space | Membership, access hours, booking, accessibility, travel, staff support, network value, permitted commercial use |
| Public/youth program | Mission fit, eligibility, safeguarding, insurance, releases, accessibility, transport, instruction, paid pathways, restricted funding |

Approve ownership only when expected utilization, control, privacy, accessibility, or avoided rental cost justifies its full lifecycle cost. Depreciation is an accounting/tax allocation, not cash available to spend; obtain accounting advice for the actual entity and asset.

## Community-return model

RE:IMAGINE provides a useful external comparison—not an affiliate or a template license. It publicly describes training, industry exposure, job placement, apprenticeships, a summer short-film program, professional workshops, and resources connecting young people to grants, internships, equipment, webinars, and jobs.

A Loptr Lab community pathway should measure:

- young people served and completed;
- paid training or apprenticeship hours;
- portfolio-ready and rights-cleared work completed;
- credentials, referrals, interviews, placements, or paid commissions;
- equipment/facility utilization;
- accessibility accommodations and transportation support;
- participant consent, safeguarding, privacy, and ownership outcomes;
- direct dollars reaching participants versus administration and assets.

Source: [RE:IMAGINE](https://reimagineatl.com/), accessed September 13, 2026. Its reported outcomes are third-party claims and are not adopted here as Loptr Lab results.

## Decision path

1. Confirm cash was actually received.
2. If restricted, use it only for the approved purpose and document outcomes.
3. If unrestricted, pay fees, taxes, contributors, and valid recoupment.
4. Protect operating runway.
5. Compare buying, renting, shared space, and youth/community delivery.
6. Approve only the path supported by evidence and a reversible exit plan.

## Stop conditions

Do not:

- describe gross contract value as take-home pay;
- count contingent revenue as present financing;
- recoup an expense from contributors without express agreement;
- divert restricted funds;
- promise a payment date unsupported by the payer or contract;
- purchase assets before funded obligations and accessibility needs are protected;
- imply affiliation with Netflix, RE:IMAGINE, a collection society, or an educational provider;
- treat this framework as legal, tax, investment, or accounting advice.