Zero-Based Budgeting (ZBB)

Zero-Based Budgeting (ZBB) is a budget management method where every expense must be justified from scratch each period, rather than assuming previous budgets carry over. Instead of starting with prior allocations, managers analyze all activities and expenses, prioritizing those that align with current goals. This approach ensures resources are allocated efficiently, reducing waste and increasing accountability, by continuously evaluating the necessity and value of each expenditure. It promotes a thorough review process, encouraging organizations to justify spending anew, which can lead to more strategic financial planning and cost control.