Zero based Budgeting - FP&A

Want to accelerate your FP&A learning journey?

FP&A Professionals Institute (FPI) Programs:

Coupon Code: EARLY50 (expires one week ahead of batch start)

Coupon Code: EARLY50 (expires one week ahead of batch start)

----------------------------------------------------------------------------------------------------------------------
Zero Based Budgeting - FP&A

* Meaning: Ignore PY Budget / Start from scratch, Avoid expenses not absolutely essential and Managers must justify every single expense.

The most popular form of organizational budgeting is zero based budgeting, often referred to as ZBB.What the ZBB approach was essentially changing our financial mindset, we're being forward-thinking and forgetting the past. In zero based budgeting the current year's budget is prepared from scratch without considering the budget of the previous year.

Time Consuming and Costly

Not suitable for some industry - stable
Suitable for some industry - dynamic
Advantages
Forward looking
Results in Cost savings
Eliminate errors of prior years
Allocates resources effectively / Eliminates Waste/ Encourages Efficiency
Discipline

Disadvantages
Time consuming and
Resource Intensive
May impact Productivity

Zero based budgeting encourages discussion around the budget because everyone must explain their expense of relation to the program and the organization's goals

zero based budget,fp&a interview questions,fp&a analyst,budgeting for beginners,zero based budgeting kya hota hai,zero based budget kya hai,fp&a profile,fp&a,fp&a process

[izualocampbell]

Love your explanation. In doing the Zero-based do you have to do a rolling forecast budget to monitor?

[prasoonagrawal]

Plz add more videos on FP&A profile