5. Stranded budget in completed campaigns and closed expenses

One company realized that it had 23% of its budget still available to spend. That’s not great. Worse, they had only two weeks left in their budget year to spend it—an impossible task. That 23% was an accumulation of numerous small differences between planned and actual expenses and small underspends in completed campaigns that had accrued throughout the year.

Just like the vacation money jar, they added up to a significant total. They could have added tremendous business value if they’d been easily visible to everyone on the team.

6. Inaccurate budget tracking lost to a use-it-or-lose policy

One of our customers routinely lost between 5% and 10% of her budget each year because it was difficult to spend her budget in time with the existing budget management tools. This customer didn’t have a current view of what had been spent, so she was nervous about overspending as she approached the end of the quarter. Once the expenses were reconciled, any remaining budget was lost for good. Data from our OMI survey also states that only 40% of marketers have a system to identify and reallocate unused budgets.

7. Overpaying due to multiple rush orders

Rush charges occur (most of the time, at least) when a poorly planned expense is incurred. “Poorly planned” means the team finds itself making an investment in something services-based without leaving time to negotiate a fair price. Common examples of this are prints, designs, and booths needed for events. Typically the marketing team will find itself overpaying by at least 10% for such expenses.

8. Not reconciling expenses with finance

One prospect who did not become a customer (you’ll see why in a minute) was a CMO who told us that
he did not reconcile any expenses in his multi-million dollar annual budget. We expressed surprise that this was so, since he acknowledged he had no way of knowing his current expenditure accurately. His outlier status was confirmed when he stated that he was okay if the budget was “within about 20% of the target by the end of the year.” If your company is okay with your budget being 20% inaccurate, then careful budget management is clearly not a priority.

Unfortunately, this is quite common as discovered in our OMI survey, less than 50% of marketers reconcile their marketing expenses with finance on a weekly or monthly basis. To top that off, only 40% of marketers can accurately report marketing campaigns and finance budget structure/GL codes.

9. Making mistakes in expense reconciliation

One of our customers generated a 19% budget inaccuracy by adding up the planned and actual expenses—all thanks to a spreadsheet design error. While this is a gross error, there are numerous manual expense reconciliation errors that occur over a year, such as failing to close expenses, closing them for the wrong amount, accepting expenses from other departments, logging expenses in the incorrect currency, and so on. Every one of these errors leaves a small pile of wasted budget.

Companies consistently generate cumulative budget risks of 15%-25% annually due to an aggregation of the issues above, over the fiscal year. In other words, they lose 0.8% – 2.1% of their monthly budget to the Law of Small Change. There is a tremendous opportunity to reclaim that lost budget – the marketing equivalent of a free vacation. After all, who wouldn’t like a 15-25% budget increase?