zero based budgeting (ZBB)

  

Definition

Method for preparing cash flow budgets and operating plans which every year must start from scratch with no pre-authorized funds. Unlike the traditional (incremental) budgeting in which past sales and expenditure trends are assumed to continue, ZBB requires each activity to be justified on the basis of cost-benefit analysis, assumes that no present commitment exists, and that there is no balance to be carried forward. By forcing the activities to be ranked according to priority, ZBB provides a systematic basis for resource allocation.

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  • Our zero based budgeting system was in full force and working greatly and it gave us all a really good feeling about our new year in business.

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  • The zero based budgeting strategy was deemed to be optimal because we felt a healthy and invigorating sense of pressure.

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  • You need to always have different strategies that you can use and one that you can try is a zero based budgeting strategy.

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