What is Zero-based Budgeting?
A definition of Zero-based Budgeting
“Zero-based budgeting is a method of budgeting where every expense must be justified for each new period, starting from a ‘zero base’ and analyzing needs and costs for each department.”

Business Glossary > What is Zero-based Budgeting?
Examples of Zero-based Budgeting in a Sentence:
Zero-based budgeting requires departments to justify their requests for funds.
Implementing zero-based budgeting can lead to more efficient resource allocation.
Our company switched to zero-based budgeting to cut unnecessary expenses.
Why is Zero-based Budgeting Important in Business?
Zero-based budgeting matters because it encourages efficiency by requiring all budget items to be reviewed and justified, preventing unnecessary costs and promoting optimal allocation of resources. It fosters accountability and strategic financial planning.
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Associated Terms
Here are some associated business terms and synonyms for “Zero-based Budgeting”:
- Zero-based Costing
- Priority-based Budgeting
- Base Zero Budgeting
Unilever and Zero-based Budgeting
Unilever adopted zero-based budgeting to optimize its marketing and operational expenses. By justifying all expenditures from a zero base, Unilever was able to significantly cut costs and improve profitability.
Final Notes on Zero-based Budgeting
Zero-based budgeting promotes a culture of accountability by requiring detailed justification for each expense. Companies should assess its implementation to improve resource management and strategic financial alignment.
This has been a definition of Zero-based Budgeting meaning.
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