Zero-based Budgeting
Zero-based budgeting is a fundamental technique in finance and accounting. The concept explains the advantages and drawbacks of zero-based budgeting and provides a useful set of steps to guide leaders and managers in implementing the technique successfully.
Technique Overview
Zero-based Budgeting Definition
Zero-based budgeting (ZBB) is a budgeting method where every expense must be justified based on its expected outcomes, without relying on previous budgets or achievements (McKinsey & Company, 2019). Each department starts from a "zero base" annually, requiring detailed justification for all expenditures. Top management approves budgets only when convinced that the proposed activities provide clear value for money (PwC, 2020). This approach ensures spending aligns with current priorities and optimises resource allocation across the organisation.
Zero-based Budgeting Description *
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Business Evidence
Strengths, weaknesses and examples of Zero-based Budgeting *
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Business Application
Implementation, success factors and measures of Zero-based Budgeting *
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Professional Tools
Zero-based Budgeting videos and downloads *
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Further Reading
Zero-based Budgeting web and print resources *
Zero-based Budgeting references (4 of up to 20) *
- Atrill, P. and McLaney, E. (2019) Management Accounting for Decision Makers. 9th edn. Harlow: Pearson Education.
- Bain & Company (2023) 'Zero-based Budgeting: A Comprehensive Guide for Modern Businesses.' [Online] Available at: https://www.bain.com.
- Boston Consulting Group (2021) 'Zero-based Budgeting Reloaded: Evolving to Meet the Needs of Modern Enterprises.' [Online] Available at: https://www.bcg.com.
- Buttonwood, P. (2019) 'Implementing Zero-based Budgeting in the Modern Workplace.' Journal of Financial Planning, 15(2), pp. 89-102.
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