Cutting is the easy part

Halfway through the fiscal year, the CFO announces that the marketing budget will drop by a fixed amount, spread across all countries. Which campaigns should go is left open.

Do CFOs cut marketing budgets first? No. In regular budget planning, only 27% of CFOs name marketing as an area for cuts (Gartner, 2025). When profits fall short of plan, though, marketing is often hit first. And when marketing budget cuts do come, the CFO names a sum, and marketing itself draws up the list of campaigns that go.

Why the CFO names a sum

The CFO decides how much has to be saved. Whoever owns the budget makes the choice, which in marketing means the CMO. The CFO would also lack the basis for a choice of their own. Accounting shows costs, but not whether an activity reaches its target. That information sits in marketing, if anywhere.

This hits marketing hard, because unlike rent and salaries, marketing spend can be stopped within a year: whatever has not been ordered yet can be dropped.

How headquarters and countries make marketing budget cuts

In my projects, the announcement usually comes around the middle of the fiscal year, when the company is behind its revenue targets. What follows regularly plays out like this. The CMO has to spread the sum across departments and countries. That starts with the current position: what was planned, what has been posted and what is still open. The CMO's team pulls these figures from the system and reconciles them with the plan, country by country. That is where most of the time goes, all the more so when marketing compiles campaign results by hand to argue that a campaign should not be cut.

Cuts come out of the available budget, meaning the plan minus what has already been posted, accrued or ordered. The CMO and the countries negotiate how much each country cuts. The CMO sees which countries want to cut more and which less, and shifts cuts between them until the CFO's target is met.

The countries know which campaigns sit behind the amounts, so they decide what goes in detail. Their open purchase orders show them which costs are still coming, and so where the red pen can go. Everything not yet ordered goes first. Next come the activities considered dispensable, until only the part the country cannot do without is left.

This sequence follows the order status. This is sensible, because canceling an order already placed can trigger cancellation fees. A campaign's impact, on the other hand, hardly plays a role, because the figures are missing at that moment. An activity that did well last year but has not been ordered for this year goes before a weaker one that has. In the end, the CMO cannot tell the CFO what the cut will cost, for example how many inquiries or dealer promotions will be lost.

Some countries already mark during budget planning which activities can be cut and which cannot. When the announcement comes, their sequence is already settled.

What makes the list faster and better

The quality of the list is decided earlier, during planning. Four things help, whatever the tool:

1. Plan and actuals per budget line, month and country in one view, together with the general ledger account the costs are posted to. A budget line is a row in the marketing plan, an activity or a campaign. The gap between plan and actuals is then visible without anyone collecting figures.
2. A target for every campaign, set when it is created, including effects that cannot be measured directly. Only then can anyone say what a cut costs.
3. Whether each budget line can be cut, decided in budget planning. The sequence is then settled before the pressure arrives.
4. Commitments, meaning what has been ordered but not yet delivered. Without them, the available budget looks bigger than it is.

An example with made-up numbers: the CFO wants €50,000. Four budget lines have not been posted yet, and one of them has already been ordered.

Going by order status and amount, the dealer promotion would go first, because it is the largest of the three lines not yet ordered. With the list, marketing cuts the webinars and the ads and can tell the CFO what that costs: 200 registrations and 60 inquiries. A CFO would rather see the consequence as contribution margin. Where the close rate and the contribution margin per order are known, a range can be worked out from the inquiries.

Why marketing figures need to follow the CFO's logic is covered in Clean data, no decisions. For an overview of plan, actuals and campaigns, see the article on marketing controlling.

How Mykorisa approaches it

For all four points, a company first has to be able to describe how its marketing plans, places orders and records costs. My principle for this is: "If you can't describe your processes, you can't read your data." So Mykorisa starts with that description, including the targets of the activities and the systems the figures come from.

Kiritsu, Mykorisa's platform, captures that structure. It was built from two sides at once: with the countries that work with it every day, and around the problems of CMOs at headquarters. Every budget line has a purchase order number assigned to a general ledger account. Actuals come in automatically from the ERP, at whatever frequency the company sets, daily or weekly for example. What arrives in accounting lands where it was planned. Every campaign gets a target when it is created. The countries decide whether a line can be cut, and Kiritsu has no separate field for it. Finance works at the level of the budget line, marketing steers at the level of the campaign, and both sit on the same row. Each country keeps its chart of accounts as it is. Only the campaign is standardized, through consistent campaign names.

When a cut comes, the planned, posted and accrued amounts are visible per month and country, accrued meaning delivered but not yet invoiced. Costs that will only be posted later therefore already count in the round of cuts. Each country enters in Kiritsu how much it wants to cut. It knows its open purchase orders from the ERP, and they go into that figure. The CMO confirms the figure or sends it back for review. The discussion itself happens outside the tool, by phone for example. Kiritsu deliberately does not map internal processes.

For a new budget, Kiritsu adopts the existing cost centers or creates new ones with consistent names. It delivers the data formatted so that the company can upload it to its ERP itself. There is no direct interface for this, because who may write to the ERP remains the company's decision.

Frequently asked questions

Is marketing cut first in every budget round?

No. In Gartner's 2025 survey, 27% of CFOs named marketing as an area for cuts, with HR and IT well ahead. When profits fall below plan, though, The CMO Survey 2026, a survey of US marketing leaders, finds that marketing is cut first in 45.4% of such cases, and in 49.9% among B2B manufacturers. Neither survey covers mid-sized companies in Germany, the Mittelstand, and there are no comparable figures for them.

Why does the CFO cut across the board instead of targeting campaigns?

Because the choice lies with whoever owns the budget, which in marketing means the CMO. The CFO sets how much has to be saved. A targeted choice would also need information that is not in the accounts: whether an activity reaches its target and what dropping it would cost.

Is marketing part of SG&A?

That depends on how the income statement is structured. Under the cost of sales method (§ 275(3) of the German Commercial Code, HGB), marketing belongs to selling expenses and is therefore part of SG&A. Under the nature of expense method (§ 275(2) HGB), which the companies I know use, there is no such line, and marketing costs are spread mainly across other operating expenses and staff costs. This concerns how costs are presented in the annual financial statements. For internal steering, what counts is cost accounting with its cost centers.

How do I justify the marketing budget to the CFO?

In the CFO's terms: per budget line, with account, plan, actuals and target. Then the CMO can show what a cut would cost instead of only warning against it in general.

What gets cut first?

In the companies I know, everything not yet ordered goes first, then dispensable activities. The sequence follows the order status, because orders already placed can trigger cancellation fees and the figures on impact are missing at that moment. It is better to decide during budget planning which budget lines can be cut.