Zero-Based Budgeting

Zero-Based Budgeting (ZBB) is a budgeting method where every expense must be justified for each new period, starting from a "zero base." Unlike traditional budgeting, which typically uses the previous year’s budget as a baseline, ZBB requires managers to evaluate and prioritize every budget item each time they plan. This approach ensures that funds are allocated according to current needs and priorities, rather than past spending. It promotes efficiency and accountability, as managers must demonstrate that each expense is necessary for achieving organizational goals.