5.0 Accounting

5.1 Usual Method

Traditionally the manager always controlled the artist’s income. It was seen as very much the manager’s job to look after the money. The manager would be responsible for ensuring that earnings from the artist’s activities are paid in full and on time. The manager would then prepare management accounts on a regular basis (perhaps semiannually or quarterly) showing all income received and all expenses incurred. Each set of accounts would be accompanied by a cheque in favour of the artist for the amount due. This system often still applies although semiannual accounting is now frowned upon. Most managers agree to account to their artists either quarterly or perhaps even on a monthly basis.

5.2 Alternative Method

Many artists prefer to take control of their own money. Some artists feel that if a manager is entitled to 20% with the artist retaining the remaining 80% it is nonsense for the manager to receive 100% and account to the artist for 80%; rather it is more sensible for the artist to receive 100% and to account to the manager for 20%. Some managers are delighted if an artist wishes to adopt this approach. Looking after the money is obviously important but many managers see this as a particularly time consuming and dreary function so that if the artist is prepared to take this away and still pay the manager 20% then the manager may not complain. Other managers take the view that artists tend to be unbusinesslike and sometimes unreliable so that the manager needs to take control of the money in order to ensure that both the manager and the artist is paid. Moreover, the significance of expenses should not be underestimated. It is quite likely during the early stages of an artist’s career that the aggregate of the manager’s commission and any recoverable expenses will represent the lion’s share of any available income.

5.3 Pitfalls

Many managers will allow the accounting function to be removed from them but only if the artist employs a reputable firm of chartered accountants to undertake the accounting function on the artist’s behalf and to pay the manager’s commission and expenses upon presentation of invoices. Some artists think that in this way their money will be safer. This is not necessarily true. There has been a number of well publicised cases of music business accountants acting improperly so far as their clients’ money is concerned. Perhaps not all managers are trustworthy (as in any line of business) but the vast majority of them are and unless the artist has a proper degree of trust in the manager he or she should not have entered into a management relationship with that manager in the first place. It is not always efficient for payments to have to be cleared through an accountant’s office. Moreover, an accountant will naturally charge for his or her services and these changes will usually be borne by the artist rather than the manager. All in all, there is perhaps more to be said for the traditional accounting arrangements coupled with some contractual safeguards for the artist (so that for example the artist’s money must be paid into a separate client account held by the manager rather than be mixed with the manager’s own money and so that the artist has suitable rights of audit).