Finance and Marketing: Can’t We All Just Get Along?

November 6, 2014 Matt Davis

Finance and Marketing: Can’t We All Just Get Along?Finance and marketing professionals usually speak two completely different languages. They use different systems to track budgets and investments — and in most organizations, there’s often a disconnect between the marketing expenses the CMO reports and the bottom line the CFO tracks. To get those numbers to match up, members of both the marketing and finance teams spend a lot of hours reconciling and number-crunching.

At Allocadia, though, things don’t work that way. I talked to Samantha Bannister, CPA, CA, Allocadia’s new controller, to get her two cents on how finance and marketing can have a more harmonious relationship. And yes, it is possible!

Why are so many finance and marketing teams on different wavelengths?

As a CFO or controller of any tech-based company, you have two main discretionary costs: people and marketing. When marketing is one of your biggest budget areas, you need to know sooner rather than later what you’re actually on track to spend compared to your budget. But, that’s easier said than done.

Here’s where the disconnect happens. Financial systems take into account factors such as amortization and deferred costs, and generally marketing systems ignore those factors. So, if I pay an invoice for $50,000 today for a trade show that’s happening in February 2015, it won’t show up as an expense until next year. But, marketing departments are cash-oriented, and their systems count that money as spent.

Another example: When marketing teams are putting together their forecasts, they might estimate a cost based on the current international exchange rate for a currency. By the time the payment is made, though, the exchange rate could have changed dramatically, and finance would track a very different total cost.

As a result, finance’s statements don’t match marketing’s reports. That leads to a lot of headaches and time spent reconciling and potential.

Why is it difficult to use financial systems to answer marketing questions?

Most financial systems are set up to code expenses based on fairly broad categories. So, all marketing expenses are likely lumped into a few categories. When we have detailed questions like “Is this particular marketing activity driving ROI?” or “How many leads did we bring in for how much money from a trade show or  direct marketing campaign?”, it’s virtually impossible to come up with an answer based on the financial data alone. Financial systems just aren’t built to answer those marketing questions.

We think of Allocadia as a tool for marketers. But how do you use it to make your job as CFO / Controller easier?

As CFO / Controller, you have to make decisions quickly. If marketing is one of your largest budget areas, and you spend a lot of time reconciling your numbers to get on the same page as marketing, you don’t leave yourself with much reaction time to make important decisions about the next quarter or year’s budget.

CFOs want their numbers that relate to marketing budget assumptions. Are we on budget? Are we investing in the right way? Those are questions we want to be able to answer quickly. Allocadia makes that possible. I really do love it. It makes my job a lot easier and the conversations between the marketing department and finance are collaborative and are guided by a defined structure.

Tell me how you use Allocadia.

Every time an invoice comes in, I put it into the accounting system with a unique code which is supplied by the marketing team. When the numbers are final and every expense is tagged with a code, the marketing team uploads the numbers to Allocadia. By definition, all of our numbers immediately reconcile, and we can see what kind of ROI we’re getting and why we’re over or under budget. Allocadia helps everyone on the senior leadership team make more informed decisions, fast.

In my past roles, I’ve spent a lot of time trying to figure out what the difference was in what marketing was presenting and what  finance was reporting. Allocadia helps those two departments speak the same language and get to a consensus more quickly. If marketing is over budget, we can quickly find out why and work together to make a decision about our budget going forward.

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The Marketing and Finance Alignment Problem is Real
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