Learn Finance Team Rules

How to cooperate with the Finance Team as a CMO. Get finance team's format requirements for budget planning and reporting.

Your finance team has specific requirements, systems and frameworks for budget planning and expense management. Marketing budget management should differ from how finance needs to see it.

Why? There are multiple simple differences:

  • Marketing uses different categorization (example: while finance focuses on cost centers, marketing needs channel-based for effective budget management)
  • Marketing uses different terminology and calculates revenue differently (example: MRR calculation)

But, still, you need to be able to export your revenue plans and marketing budget in a format that can be easily understood by the Finance Team and imported into their systems.

As CMO, you want to be treated by CFO and your Accounting team as a business partner who understands financial terms and impacts revenue. If they view the marketing team just as the largest a cost center, you'll face challenges in budget negotiations and approvals.

Cost Centers Structure

Every line item in your marketing budget must be assigned to a cost center.

Cost centers are tracking codes used by finance teams to categorize and monitor expenses across the organization.

Cost centers act as financial labels that help organize spending into specific buckets for accounting purposes. Here's an example structure:

  • MKTG-STAFF-EU (103-1001): Employee costs
  • MKTG-ACQ-DIG (103-2001): Digital advertising
  • MKTG-ACQ-EVT (103-2002): Events and conferences
  • MKTG-TOOLS (103-2003): Marketing software and tools
  • MKTG-BRAND (103-2004): Brand and creative production

Get your current cost center list and check if they're self-explanatory. If not, ask finance for definitions and examples.

Review the cost center structure. A new marketing strategy might require consolidation of old cost centers and addition of new ones. For example, you might have separate cost centers for "Social Media Ads", "Search Ads", and "Display Ads" from years ago that could be consolidated into a single "Digital Ads" cost center.

When planning such changes or adding new cost centers, clarify with finance:

  • Can you propose cost center updates? (usually it's possible once a year in Q4)
  • What's the proposal process and who needs to approve the changes
While cost centers are crucial for finance reporting, don't let them dictate how you categorize expenses in your day-to-day marketing budget management.

Planning Horizon

While you're focused on next year's budget, check if your company requires multi-year projections:

  • Some companies need 3-year plans for strategic planning
  • Others require 5-year projections for board or investor relations
  • You might need different detail levels (detailed Year 1, high-level Years 2-3)

Currency handling

Your marketing budget needs a clear approach to handling multiple currencies, especially if you're working with international campaigns or contractors.

First, confirm your reporting currency with finance. This is your company's primary currency where all business metrics are recorded - both revenue and costs. Even if specific line items (e.g. software or contractors) are being paid in a different currency, they will be converted to the primary reporting currency at a given exchange rate.

Companies typically follow one of two approaches for handling exchange rates:

  • Company-Wide Fixed Rates - Finance sets standard exchange rates for the entire fiscal year, and all departments must use these rates for budget planning. You don't take the risk of exchange rate fluctuations - it's managed at the company level by the finance team. Your job is simply to assign the correct original currency to each line item.
  • Market-Based Flexible Rates - Departments use current market rates and manage currency risk independently. In this case, add at least a 3-5% buffer to your budgeted amounts to protect against rate fluctuations.
Ask your finance team early which approach your company follows and where to find the official exchange rates for your planning.

Output requirements

Most finance teams require a specific spreadsheet structure for budget submissions. Get their template early and confirm required columns (e.g. cost center, description, amount, currency, payment terms, vendor details).

Understand their preferred level of detail. Some finance teams want every campaign broken out separately, while others accept higher-level groupings. Get this clarity early as it affects how you structure your line items.

Marketing Budget Template ≠ Finance Budget Template

Finance and marketing have different goals for planning budgets. Finance needs them to accurately forecast cash flow. Your goal is different. Creating a budget that helps you reach marketing targets and bring new customers. How you work with your budget can differ from how you submit it to finance.
Create a "translation layer" between your working budget and finance's required format. Marketing budget software like Etropo can export your budget to finance team's format. This saves you from manual reformatting work.

Regional Tax Requirements

When adding line items, you might need additional properties related to tax management, such as:

  • VAT? (yes/no)
  • Vendor's tax registration region (EU/US/Canada/Other)
  • Certificate of residence needed? (yes/no)
Certificate of Residence is crucial when an EU-registered company purchases services from non-EU vendors (like software). Missing this document means paying an additional 20% in withholding tax. In smaller companies, you and your team will be responsible for obtaining this document - which can be challenging with software vendors who aren't familiar with EU requirements.

Team Compensation Planning

Team salaries and bonuses often represent a significant portion of your marketing budget. Check with your HR and finance teams how to handle:

  • Your salary - should it be a separated line item in the marketing budget (or is it covered in the Board/Leadership budget)
  • Annual salary increases - whether to plan as one bulk line item for the whole team or individually per role. Is there any extra approval process you should follow?
  • Performance bonuses - if marketing budget can include them or if they're managed centrally by HR
  • Sales provisions - especially for roles like Partner Marketing that might have revenue-based compensation
If you have "Full Autonomy" in budget planning, you might be offered to propose bonus structures not only for your key team members but even for yourself. Other companies manage all compensation changes centrally through HR. Get clarity on your company's approach early in the budget planning process.