Comments on: Customer Accounting: How to Speak Finance http://blog.jimnovo.com/2007/02/08/customer-accounting/ Moving from a Low Accountability to a High Accountability Business Model Sun, 7 Mar 2010 12:47:21 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Jim Novo http://blog.jimnovo.com/2007/02/08/customer-accounting/comment-page-1/#comment-74 Jim Novo Tue, 13 Feb 2007 21:23:47 +0000 http://blog.jimnovo.com/2007/02/08/customer-accounting/#comment-74 Thanks for your comment, Thomas, I'm with you on that idea. This post was targeted to Marketers who have not started a dialog with their CFO yet - providing an "icebreaker" of sorts. Sounds to me like you have had this initial discussion and a whole lot more with your CFO! In an environment like yours and many I have worked in, it is common for Marketing not to really have a "budget" except on paper. I have never met a CFO who won't give you every Marketing dollar you ask for as long as you can prove you are beating whatever threshold (IRR, etc.) the CFO uses to allocate capital. And it gets even better than that. I've been involved with some situations where the CFO comes into Marketing and says, "If I gave you guys $250,000, what kind of (sales, cash flow, gross margin, etc.) do you think you could generate over the next 60 days?" It IS possible to have that kind of relationship with a CFO. You simply have to get on their page (as you have done) and show them the numbers. It's the CFO's job is to make sure capital is being allocated to the highest and best use. If your marketing campaigns don't generate a return higher than T-Bills, well then, you deserve the budget you have. Thanks again for the post. Thanks for your comment, Thomas, I’m with you on that idea. This post was targeted to Marketers who have not started a dialog with their CFO yet – providing an “icebreaker” of sorts. Sounds to me like you have had this initial discussion and a whole lot more with your CFO!

In an environment like yours and many I have worked in, it is common for Marketing not to really have a “budget” except on paper. I have never met a CFO who won’t give you every Marketing dollar you ask for as long as you can prove you are beating whatever threshold (IRR, etc.) the CFO uses to allocate capital.

And it gets even better than that. I’ve been involved with some situations where the CFO comes into Marketing and says, “If I gave you guys $250,000, what kind of (sales, cash flow, gross margin, etc.) do you think you could generate over the next 60 days?” It IS possible to have that kind of relationship with a CFO.

You simply have to get on their page (as you have done) and show them the numbers. It’s the CFO’s job is to make sure capital is being allocated to the highest and best use. If your marketing campaigns don’t generate a return higher than T-Bills, well then, you deserve the budget you have.

Thanks again for the post.

]]> By: Thomas Carrillo http://blog.jimnovo.com/2007/02/08/customer-accounting/comment-page-1/#comment-71 Thomas Carrillo Tue, 13 Feb 2007 18:52:44 +0000 http://blog.jimnovo.com/2007/02/08/customer-accounting/#comment-71 Hi Jim, I find with that my CFO wants to know what the investment is worth to him today (t=0). My job is to prove to him that the Net Present Value of our investment into online marketing initiatives is positive. That entails forecasting future cash flows and discounting them at the cost of capital. If I can show my CFO that our return exceeds the cost of capital, then we are sitting pretty. Hi Jim,

I find with that my CFO wants to know what the investment is worth to him today (t=0). My job is to prove to him that the Net Present Value of our investment into online marketing initiatives is positive. That entails forecasting future cash flows and discounting them at the cost of capital. If I can show my CFO that our return exceeds the cost of capital, then we are sitting pretty.

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