How Sales And Finance Teams Can Work Together

Sometimes the only thing on which sales and finance teams can agree is that preparing budgets is a frustrating task, and that the other department simply doesn’t understand reality. You know the stereotypes. Finance is the department full of bean counters and cops. They want to know exactly how much will be sold and at what price. Worse yet, they are overhead – a source of expense, not revenue. On the other hand, you have sales. They are the slick characters who spend company money on entertainment while expecting others to do their paperwork. The expense report was due yesterday, and all the salesperson can say is that they are busy trying to close a big multiplatform deal. When asked for a revenue forecast, there’s never a straight answer.

Mary M. Collins

No matter the company size, today’s media businesses are exponentially more complicated than they were even a decade ago. That means to get budgets and sales forecasts right, sales and finance need to work together. Fortunately, it can be done, and the parties involved may even grow to appreciate their former foes.

The Challenges

In general, a media business’s finance group is responsible for financial reporting and developing policies for financial controls. This group is also charged with management of cash and investments, financial statements and strategies for financing acquisitions and projects as well as planning and executing on the company’s strategic goals. If the company is not privately held, the finance department must prepare myriad quarterly, semiannual and annual state and federal reports. Incorrect information in these documents can result in anything from drops in shareholder value to charges of fraud. It’s no wonder finance takes its budget and forecasting responsibilities seriously.

Media sales, whether local or national, is charged with convincing clients to spend money on something they cannot touch, taste, feel or smell. To make the job even more challenging, this product may be delivered linearly or digitally, which means the buyer may or may not be able to see or hear what’s been purchased at any specific time or in certain places. Furthermore, even if a client signs a contract, idiosyncrasies in both how the product is delivered, and in how media ad sales agreements are structured, mean there is no guarantee the company will receive a specific amount of revenue during a certain time period. These unique characteristics make it difficult to budget and forecast accurately.

But these challenges are not insurmountable. All they require is that the leaders of the two departments find a way to have a good working relationship. (Generally, it behooves the finance department to take the lead. Good ad salespeople will have a full slate building relationships with and providing service to current and potential clients; they are unlikely to focus internally until they need assistance.)

Meeting Of The Minds

Smart finance people will immediately be able to understand the value of this relationship to their department as well as be able to demonstrate its value to the sales team. Finance can provide a fresh set of eyes and a different set of skills than those of the most sellers. Numbers people can help build complex analyses and can uncover potential problems before proposals are presented. They are also good at modeling compensation and commission plans to meet sales leadership goals.

Today’s ad sales professionals need tools and training to get deals closed; relationships alone aren’t enough. Underinvesting in platforms to support clients’ ordering systems and campaign data requirements will just make their jobs frustrating and ad sales targets nearly impossible to achieve.

Sales training is also key. The savvy finance person will find ways to include such training in the annual expense budget and to attend one or more sessions each year. Once armed with the basics, finance can then offer to participate in occasional sales calls. Understanding what sales actually experiences is crucial to the relationship.

Incidentally, I advise against trying to shortcut this by simply having a finance person participate in regular sales meetings. Salespeople are apt to view the outsider as a spy, which will make meetings less productive. It will be even worse if the finance person, without having any direct experience with the client or situation, questions decisions or is believed to be providing unfavorable reports to senior management.

On the other hand, asking sales to participate in finance meetings can be beneficial for all concerned. This allows sales to understand that department’s challenges and how the sales team fits into the process.

Several people I spoke with mentioned that recruiting sales representatives is more challenging than it’s ever been. Media sellers need to understand today’s technology and there are any number of businesses looking to recruit people who understand technology and can sell. The best candidates will be looking for jobs where they can feel appreciated. What better way to demonstrate this than by being able to point to tools, training, and the finance department’s support?

Successful Budgeting And Forecasting

A good working relationship between sales and finance teams is crucial for preparing the best possible financial projections. Every person I spoke with talked about the importance of using a bottom-up approach. As one CFO said, “If you sell 100% of available inventory at rate card rates, you can make accurate projections.” But there are so many variables. How much inventory is there to sell? What is the rate card rate? Who is going to buy the spots? Who is going to sell them? Does the business have enough sellers? If sellers are needed, where will they come from and how will they be trained? And the question that no one can answer until after the fact: will all advertising run as planned?

The other question is around how aggressive or optimistic to make the budget. Whenever possible, a conservative approach is better. There are always fewer complaints when sales are better than budget or forecast.

When Senior Management Sets The Targets

In some companies, the sales team will be told to take the prior year’s budget (or forecast) and prepare a budget that includes an X% increase in revenue and/or a Y% decrease in costs. To get to the best answer, the team still must build from the bottom to determine how it will achieve the goals.

Yet, despite a healthy dose of optimism and that second set of eyes from finance, there will be times when the team cannot realistically prepare a budget that meets the preassigned targets. For example, when achieving the revenue goal requires hiring salespeople not covered in the expense target. A strong sales and finance relationship is invaluable in this situation. One person suggested that, in this situation, each department work through their respective channels to request reconsideration. Another said that this is the time to “speak truth to power.” Armed with data to support the argument, let the board know that, while ad sales will “swing for the fences and try to make stretch goals,” things may not go their way because of A or B.

Ultimately, the sales team needs to believe that the budget is realistic. If they don’t, they will be demotivated and doomed to failure. Perhaps worse yet, the best salespeople will leave for what they see as better opportunities. Without well-trained and experienced sellers, a company cannot achieve its goals.

What About Political Advertising?

Every finance person I spoke with warned against being overly optimistic about 2024 political advertising dollars. As one said, “There’s no magic potion to bring political ad dollars raining down.” In general, they advised against including a revenue figure without a real plan for how it will be achieved. More importantly, they cautioned against counting on political ad dollars to make up shortages from a non-political year.

Media ad sales budgeting and forecasting have always been challenging. The rapid pace of change in the industry have made these projections increasingly difficult and frustrating. Despite this, sales and finance teams that develop mutual respect and an understanding for the other’s responsibilities will be able to work together to more easily and accurately prepare financial plans. The result will benefit both departments and the business as a whole.