Zero-Based Budgeting - ZBB

Filed Under »
Dictionary Says

Definition of 'Zero-Based Budgeting - ZBB'

A method of budgeting in which all expenses must be justified for each new period. Zero-based budgeting starts from a "zero base" and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one.

ZBB allows top-level strategic goals to be implemented into the budgeting process by tying them to specific functional areas of the organization, where costs can be first grouped, then measured against previous results and current expectations.
Investopedia Says

Investopedia explains 'Zero-Based Budgeting - ZBB'

Because of its detail-oriented nature, zero-based budgeting may be a rolling process done over several years, with only a few functional areas reviewed at a time by managers or group leadership.

Zero-based budgeting can lower costs by avoiding blanket increases or decreases to a prior period's budget. It is, however, a time-consuming process that takes much longer than traditional, cost-based budgeting. The practice also favors areas that achieve direct revenues or production; their contributions are more easily justified than in departments such as client service and research and development.

Articles Of Interest

  1. 6 Months To A Better Budget

    Can you have perfect abs in just six minutes a day? Maybe not, but you can have a rock-solid budget in six months.
  2. The Beauty Of Budgeting

    Make it to the end of the month, before you run out of money.
  3. Run Your Finances Like A Business

    Think of yourself as your own little company. To make it run smoothly, you need to take a look at your books.
  4. 5 Money Moves To Make In September

    From a financial perspective, September is a great time for a quick reboot of your financial mind-set.
  5. Financial Risks That Don't Pay Off: The Cost Of Reckless Financial Behavior

    Despite the recessions, citizens continue to take financial risks and spend outside of their means without fully appreciating the potential consequences for both themselves and the wider economy.
  6. An Overview Of Commodities Trading

    Commodities markets, both historically and in modern times, have had tremendous economic impact on nations and people. Investing in commodities can quickly degenerate into gambling or speculation ...
  7. How To Break Your Bad Financial Habits

    If the current level of economic growth is to be maintained and improved upon, citizens must play their part by practicing responsible spending and borrowing.
  8. Tax Holidays For Back-To-School Shopping 2013

    Find out the types of back-to-school purchases that are exempt from sales tax for each state that is holding a tax holiday.
  9. How To Match Your Savings Goal With Investments

    Sometimes beginning investors forget the trick to success when it comes to investing money: you need to match your future financial goals to the right kind of investment.
  10. 8 Clear-Cut Ways To Becoming A Better Saver

    These sure-fire budgeting tips will boost your savings quickly. The only trick is setting aside your excuses are getting started!
comments powered by Disqus
Marketplace
Hot Definitions
  1. Network Effect

    A phenomenon whereby a good or service becomes more valuable when more people use it. The internet is a good example...
  2. Racketeering

    Racketeering refers to criminal activity that is performed to benefit an organization such as a crime syndicate. Examples of racketeering activity include...
  3. Lawful Money

    Any form of currency issued by the United States Treasury and not the Federal Reserve System, including gold and silver coins, Treasury notes, and Treasury bonds. Lawful money stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves.
  4. Fast Market Rule

    A rule in the United Kingdom that permits market makers to trade outside quoted ranges, when an exchange determines that market movements are so sharp that quotes cannot be kept current.
  5. Absorption Rate

    The rate at which available homes are sold in a specific real estate market during a given time period.
  6. Yellow Sheets

    A United States bulletin that provides updated bid and ask prices as well as other information on over-the-counter (OTC) corporate bonds...
Trading Center