Papinder Kailesh on how to achieve financial agility and align marketing budgets with business accounts and financial results.

Managing a marketing budget has never been easy. However, the current pace of marketing change, the proliferation of consumer data and the need to adapt quickly, are making this undertaking even more complex.

Many marketers commit to annual planning processes but, in reality, a yearly plan often means goals are missed, planned initiatives are dropped, objectives are revised, and new competitive offerings send marketers scrambling to respond. These changes can make it more difficult to deliver successful marketing activities, and ultimately impact financial plans.

In many cases marketing teams can miss opportunities, simply because they aren’t flexible enough.

Budget additions or reductions typically occur throughout the annual business cycle. Often these changes originate from within the company’s leadership, requiring marketing to adapt quickly. This can result in transfers within the marketing budget, requiring marketers to change their tactics quickly and undergo additional budgetary reviews.

Budgetary changes have significant flow-on effects to marketing activities already in progress.

Both marketing and finance teams need to be able to rely on financial applications that facilitate and track these mid-stream directional shifts. Without a reliable system in place, those responsible for budgeting and marketing spend enormous amounts of time reconciling standalone spreadsheets in different formats. They also need to wade through reams of paper to consolidate and report on forecast, actuals, and accruals at campaign, channel, brand, and regional levels, across all teams and products.

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This level of complexity makes it difficult for marketing teams to be flexible and agile, and to respond quickly to changing priorities and market pressures.

There is a natural disconnect between business accounts and marketing budgets. Businesses forecast financial results that align with general ledger summary accounts. By contrast, marketers forecast based on the results of specific programs, campaigns, and activities. They then roll this detailed data up to strategies and marketing activities.

Generally, the two types of forecasting aren’t compatible.

This creates a challenge for marketers to monitor, manage, and report on every aspect of marketing spend, from the details of a single initiative, to an aggregate summary for the business owner or management team.

Another key challenge for marketers is managing multiple vendors across creative and digital agencies, event management groups, and other third-party suppliers. The need to manage multiple campaign estimates, commitments, and invoices, increases the complexity of the budget management process.

Marketers need to define how their commitments align to the various vendors, and report on these complex interrelationships.

To address all of these challenges, marketers can use a marketing financial planning application to link marketing data with the back-end general ledger system. This empowers marketers and budget controllers be more efficient and agile. This does however, require the core financial management processes to be documented and mapped into the financial planning application.

In addition, the complex relationships between invoices and general ledgers also need to be managed.

Quite regularly, there is a need to overcome a misalignment between the two. Marketers need to ensure that financial commitments match up with the marketing activities and programs according to their marketing plan.

Automating the invoice and general ledger relationship can support an allocation system that aligns payments for marketing activities with back-end financial general ledger accounts. These systems help by automatically notifying vendors upon approval of commitments, and ensuring purchase order numbers generated will simplify and streamline invoice matching once the work is complete and approved. This helps to overcome multiple pain points, including the reconciliation of multiple spreadsheets and duplication of payments to vendors.

Key processes housed in a marketing financial planning solution include budgeting, re-budgeting, forecasting, vendor management, commitment management, and invoice processing and payment. By centralising marketing budgets within structures configured by set hierarchies, (ie. by organisation, product lines, regions, lines of business), marketers can control, assign or transfer their allocated dollars, providing a well-documented audit trail that is easy to report on.

Because marketers typically operate at the campaign level, real-time spend, at-a-glance reporting, spending insights and spend alerts can make an enormous difference to their productivity. These are simple, but effective, forecasting tools that let them quickly adjust forecasted spend across campaigns.

By directing dollars to the highest-performing channels, they can improve the cost-effectiveness of their campaigns, eliminate wastage, and keep track against KPIs. This keeps their marketing initiatives aligned to specific business needs and objectives, which is particularly crucial for smaller businesses with limited resources.

With a centralised view from a single marketing application, marketers can achieve marketing and financial operational agility, giving them access to an electronic repository of all invoices and payments, taxonomy and search capabilities, which can significantly speed up and simplify their search process.

And, with the ability to adjust marketing programs by reallocating resources including dollars, personnel, and time to maximise efficiency, marketers will be empowered to more effectively align their agenda and articulate their contribution to the business.

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Papinder Kailesh is director of business consulting at Aprimo.