What does ZBB mean in UNCLASSIFIED

Zero-based budgeting is an approach to budgeting that requires managers to set all expenditure of funds against specific activities and objectives.

In a zero-based budget, each expense must be justified by its impact on a particular objective. Each expense must have a purpose and be cost-effective for the organization. This differs from traditional budgeting techniques which typically use prior year expenses as the base for the following year's spending.

Zero-Based Budgeting can help organizations better allocate money, identify duplication of effort or redundant costs, better prioritize investments, improve financial performance and increase efficiency in operations. It can also aid in decision making regarding resource allocation, identify areas for cost savings and focus spending on areas that produce the greatest return on investment.

Most organizations benefit from using Zero Based Budgeting, but it is particularly useful for organizations with high annual turnover or rapidly changing operations or goals. Smaller businesses may also find this approach useful as they often have limited resources and need to make sure those resources are used effectively.

While implementing a zero based budget can require time investment up front, when done properly it can reap rewards in terms of improved resource allocation and maximization of returns on investment. With good planning and strong collaboration between departments, leading companies have been able to successfully utilize this method with minimal disruption upon implementation.