Zero Based Budgeting Definition

Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. This means that, rather than starting with the previous year’s budget as a base and making adjustments, each department or project starts from scratch and justifies its entire proposed budget.

The goal of ZBB is to ensure that all spending is necessary and benefits the company as a whole. This type of budgeting can be time-consuming, but it can also lead to significant cost savings.