Zero-based budgeting is a financial approach where every expense must be justified from scratch for each new period, rather than based on previous budgets.
It forces intentional decision-making.
Traditional budgeting often carries over unnecessary costs. Zero-based budgeting ensures that every expense aligns with current priorities and strategy.
It’s particularly useful during restructuring or cost optimisation phases.
Each department starts from zero.
All expenses are reviewed and justified.
Budgets are allocated based on current needs, not past spending.
Better cost control, improved resource allocation, and elimination of unnecessary spending.
A company reviews all tools and subscriptions annually, removing unused or low-value expenses instead of automatically renewing them.