Why Marketing Execs Need a Good Relationship With the Finance Team
While admittedly, I haven’t spent a large portion of my career in marketing, I did however assume that the goals and priorities I brought to my new position were similar to those of the average tech marketing department. Because one of those priorities is to understand how exactly my budget works, I made a meeting right away with our finance team when I stepped into this role.
Imagine my surprise when most in my team, and in my company, were confused when our controller, Stephanie Mewhiney, and I became very close friends. No one was more surprised than our CFO, who has joked that I’ve worn out the carpet in the finance team’s office suite. Joking aside, our relationship has turned into a strategic asset for our company, which is why I argue that all financial and marketing executives should foster similar ones in their organizations.
By way of some background, when I stepped into my new position late last year, I was handed a marketing budget and told to make it last.
Better Budget Management
Like most marketers, I cannot boast that I have any training in corporate finance, and only have a fuzzy understanding of how expenses play out over the course of the year. I originally sought a working relationship with Mewhiney in order to ensure that I would be managing my budget in the most effective way possible. Today, we meet every other week to review the marketing budget and plan, as well as many times in between to discuss overall goals and strategies and best practices to implement them.
So, what do we talk about? Here’s what Mewhiney had to say: “I’m looking for any areas of overspending or under-spending, to make sure we’re on track for our overarching corporate goals. Obviously, marketing has their yearly spend, which is broken up by month, but things happen mid-year that we didn’t know when budgeting, say, eight or nine months earlier.”
And I agree, I’m always asking her how we can spend better, spread things out, and how to roll expenses into the next year.
Bottom line: By teaching marketers where and how they go overbudget, financial teams help them maximize their ROI while keeping costs contained.
Fund Ad-Hoc (AKA, ‘Surprise’) Initiatives
Surprises are part and parcel of the marketing budget. The head of sales or the CEO will say, “Here’s a good trade show, we should be here,” or “let’s send a team and a booth to this conference.” In addition to all of the coordination and details that have to be worked out, marketing has to find a way to fund them.
One of the things I have never considered when planning for trade shows is the timing of payments for them, as most invoices come due months beforehand. I also hadn't considered the effect that can have on our cash flow. Like most professionals in marketing, I just looked at my plan for the coming year and allotted funds for the months when trade shows were scheduled. But that’s not how it works. And that can really affect our cash flow. My relationship with Mewhiney has been instrumental in helping my team understand what our real monthly spending is.
Mewhiney’s goal when in our meetings is to help me understand how expenses hit the books, how much money I have in every line item to spend, and where I can find pockets of available money to fund campaigns and initiatives that make good business sense, but weren’t planned for in the beginning of the year.
Mewhiney finds that marketing is one of the more dynamic departments in the organization. “If a tactic isn’t working, marketing will act immediately to pull it or change it. This agility has an impact on the budget. It’s not like IT, where you know that if you sign up for a SaaS service the monthly expenses will be the same month after month,” Mewhiney said.
Bottom line: Financial teams can help marketers find the funds they need for critical initiatives that weren’t on the horizon back when the budget was developed.
Solid Vendor Relationships
One way I keep Mewhiney in the mix with our department is to stop by with copies of the contracts I’ve signed and provide the background and motivation behind the partnership. Then, when an invoice from that vendor comes across her desk, she knows exactly what it’s for, how to apply it to the budget, and what the payment terms are. For marketing, it means important vendors are paid on time, and ensures they view our company as a trusted business partner.
Bottom line: We value our vendor partnerships, and they deserve to be paid on time. By providing the color and insight as to the service they provided, it means finance will avoid unnecessary delays.
Turn Financial Team Members Into Better Business Partners
The knowledge transfer hasn’t been one-way; Mewhiney has learned a lot about marketing, which has enabled her to be a better business partner and strategist for us. “In accounting, we tend to look at things in a monthly and quarterly basis. Working with Kory, I’ve been able to get myself out of this accounting role and look at it from more of a business-savvy, decision-making role of, 'okay, this is what we’re going to be spending, and we’re spending it because it makes strategic sense.' So, I’ll roll up my sleeves to find the funds for it.”
Bottom line: Marketers can help the finance team understand the value of strategizing on a day-to-day basis and the benefits of spending trends that change quickly.
Marketing Budget Becomes Rolling Forecast
The result of our bimonthly meetings is that I effectively have a rolling forecast to work with, which is an unusual activity for a marketing guy, to be sure. But it’s an activity that delivers a lot of benefits. In addition to better managing cash flow, we are both hyper-aware of how much things cost, which will go a long way when we are planning next year’s budget. Plus, we’re providing peace of mind to our CEO, in that he doesn’t have to worry about the how we are spending the company’s hard-earned marketing dollars. He knows that the numbers he sees are accurate and supported by both finance and marketing. He has no fear that the marketing team will go rogue on him and end the year in a panic to pay the bills.
Bottom line: Marketing should understand how to implement a rolling forecast for their budgets. This provides a lot of freedom to be agile and change with the tactics, while still bringing the C-suite comfort in knowing you are staying within the overall budget constraints.
So, if you’re heading up the marketing team, consider taking your company’s controller out to lunch. A tight working relationship with him or her can be transformative.
Related story: 2019 Marketing Budgets: How Does Yours Measure Up?