Why Accurate Expense Management is So Important

Why Accurate Expense Management is So Important

To generate an accurate ROI, you must be able to track which expenses belong to which campaign. This is not always as simple as it may seem. Digital campaign expenses encompass more than just the media buy. For example, they may include SEO consultants, agencies, copywriters, and more. Accurate expense management is important – by capturing 100% of campaign expenses accurately, you can understand the true ROI of your marketing campaigns.

Accurate Expense Management

The team dinner check, the hotel block booking for a trade show, the rush print job for the key customer visit, the dreaded expense that’s transferred in from another department, the CRM subscription—these are different types of expenses that have very different life cycles. Some of them you can, and should, plan for. Some you need to know will happen anyway and accommodate in your planning. Taken from our OMI survey, Less than 40% of marketers measure return on investment on both campaigns and overall marketing plan.

The Expense Life Cycle

An expense is first estimated, then committed, charged, and reconciled. Let’s look at these steps in more detail:


You have to estimate expenses all the time. You know you’re going to need to book some rooms and pay for some meals at that upcoming event, or a creative agency for that upcoming campaign. When you know about these expenses in advance, you should estimate what the expenses will be. Planned expenses should have estimated amounts.


Some expenses will be large enough and far enough in the future that you decide to negotiate the price with a vendor. You may sign a contract to lock in that price along with other terms. You might sign up a PR agency for a campaign, a creative agency to help you prepare for an event, or a new technology platform to automate some of your marketing processes. Once you’ve signed the contract, you have a more precise view of the cost than your initial estimate, and you know you’re really on the hook to pay that money. You haven’t been invoiced, the service hasn’t been delivered, but you know you’re going to be paying a precise amount in the future. Negotiated expenses should have very accurate cost estimates.


Expenses are charged, from the marketers’ perspective, once the service has been delivered, or once an invoice has been sent. The expense should be marked as charged regardless of whether or not it has been paid by finance. What the marketing team should care about first and foremost is how much budget has been consumed and how much is left. Surprisingly frequently, we have met marketers who are concerned about when and whether a bill has been paid. It’s important to understand when a bill is charged against your budget, but when a bill is paid is a finance team’s concern that does not affect how much marketing budget is left. Our recommendation is that you treat invoicing as the trigger to mark an expense as charged. Likewise, you should treat credit card expenses as charged.


The majority of marketing teams receive a periodic report from finance that includes the accounting system view of all the paid bills that have been charged to marketing. Most of the time this will contain line-by-line confirmations of what you already know and have in your plan. However, the final accounting of expenses may well contain changes that you need to know about and pay attention to. For example, you didn’t anticipate the sales tax for your finally negotiated price, and the cost that finance has to account for is a little higher than you thought. Or, finance has charged something to marketing that is a surprise to you and wasn’t in your plan. This could include some credit card expense that you didn’t
know existed, an expense transferred in from another department, or a change of date to an expense due to accruals-based accounting. In our OMI survey, we discovered that less than 60% can accurately and quickly reconcile marketing expenses with finance on a weekly, monthly, or quarterly basis.

In any case, it’s imperative that you snap your plan into line with the finance team’s report to ensure that your pretty-darn accurate view of the charged marketing expenses ultimately aligns with the financial system of record. The problem is, you can’t wait weeks or months for those finance reports or you’re flying blind, and it’s impossible to spend accurately, decisively, and at the right budget burn rate. So you need to develop and manage a highly accurate team-sourced view of the reality of your charged expenses, well ahead of the finance report. Demanding accurate, real-time expense status from the entire marketing team will enable you to make fact-based, accurate decisions on time.


Now that you understand the stages, let’s review the different types of expenses and how to manage them to best achieve your marketing goals.

Carried-over expenses

When you enter your budget year, your budget should contain a number of expenses that are estimated, committed, and possibly even charged and reconciled. You should try to get those into your plan in as much detail as possible so you have an accurate forecast of spend and a clear understanding of what’s left to spend. Examples of these include:

  • Campaigns that cross fiscal year boundaries
  • Events that you do every year
  • Subscription fees for data or technology
  • Open POs for contractors or agencies
  • Corporate allocations
  • Depreciation

Many of these expenses will be at least charged, and often reconciled, on day 1 of the fiscal year.

Planned expenses

Planned expenses are the way it happens in marketing textbooks, and sometimes this is the way it happens in reality. If you have a new campaign, set of expenses, or an individual expense that you know is new for the fiscal year, you should enter it into your plan with the most accurate estimate of the expense that you can manage. It doesn’t matter if it’s imperfect— it’s much better to have something in your budget than nothing.

Examples include event expenses that are known in advance (block room booking, travel, meals, booth expenses, printing, agencies, etc,), a digital campaign with an estimated spend-per-day ceiling, technology

and data subscriptions, contractor retainers, and so on. There are many unplanned expenses that will crop up through the year, so the more thoroughly you can add your planned expenses into your budget, the better you will have visibility into what remains to be spent, and how close to over budget you are.

Planned expenses may be large enough that you have to raise a PO and negotiate price and payment terms, or they may be small, or fast-moving enough that they are charged to a credit card without a PO or contract. You may plan an aggregate cost for a group of expenses and reserve budget for them. We call this an “expense bucket.” In this context, we use expense buckets to estimate the cost of a set of expenses for which it may not be possible (or a good use of time) to estimate the line-by-line costs for each individual expense.

For example, you might budget an amount for travel every month even though you don’t know the precise make-up of taxi rides, train fares, air fares and car mileage that is going to come in. Such expenses will likely be charged to credit cards, maybe even paid by cash, and won’t be explicitly in the marketing plan with line-by-line precision. When you first see them as individual expenses, they will already be committed, or even reconciled, and they should be charged to the marketing budget you reserved for them as they come in.

Unanticipated expenses

No one likes unanticipated expenses, but they happen all the time. We normally become aware of these expenses when we receive our finance report. What’s unpleasant about these costs is that they are not planned and often already charged and accounted for the first time you see them.

It makes a lot of sense to try to understand your surprise expense run-rate if you can. If you don’t know what it is, look at some historical data and try to find expenses like this: accounting reclassifications (an expense is moved into your budget from another department); a corporate allocation you didn’t know about; someone misused the corporate credit card and you have to eat the cost.

You may also encounter surprise expenses from unforeseen issues. You may have unexpected PR costs from a crisis management project such as customer, press, investor, and analyst communications after a data breach. Or you may have to make a major mid-year adjustment in your plan due to some major external factor, like a natural disaster.

Disputed expenses

When you get a surprise expense, you may conclude it doesn’t really belong in your budget. This is a very common occurrence, and it pays to be diligent. You have enough to worry about without paying another department’s bills. Corporate and departmental allocations are frequent candidates to be disputed. You need to track marketing expenses in your budget as if it’s going to be paid by you until finance agrees to move it.

Moving expenses

You planned it. You know what date the invoice arrived and how much it was for. You know it belongs to marketing. So why can’t you find it in the expense report? As we’ve discussed earlier, it’s important to understand how your finance team accounts for expenses. Otherwise, you may find that expenses you thought hit your budget in one time period actually we’re applied in a different one. This can lead to inadvertent underspend or overspend, even if you’ve been diligently tracking your expenses prior to interlocking with the finance team.

The Unified Expense Model

The figure below is the Unified Expense Model. It shows when, during the different points throughout the expense life cycle, that different types of expenses may be initiated, the evidence for their existence, and the phases they will occupy until they are reconciled. It’s possible that your expenses won’t work exactly like this. That will depend on the specific policies and practices adopted by your company.

It is important that you and your marketing team understand how expenses are handled in your company’s marketing budget. If you understand this well, you will be able to both plan and execute your spending with a high degree of accuracy to achieve your marketing goals.


Latest Posts


Interviews, tips, guides, industry best practices, and news.

Get Started with Planful

  • LinkedIn
    How much time will you save?
  • LinkedIn
    How will your finance team evolve?
  • LinkedIn
    Where will technology support you?