‫Since 2013, research has shown that the adoption of the zero based budgeting process has exponentially
‫grown by fifty seven percent each year, over 91 percent of zero based budgeting programs meet or exceed
‫their targets.
‫Companies that have adopted zero based budgeting report cost savings between ten and twenty five percent,
‫which is a vital savings that companies can use to boost their margins or invest in future growth.
‫While zero based budgeting is best suited for addressing discretionary costs rather than essential operating
‫costs.
‫It can be extremely time consuming with the approach. With the adoption of zero based budgeting.
‫This means that everyone in the program must make room for cost management and their work day, and
‫this may impact your productivity.
‫Let's take a look at some of the advantages of zero based budgeting.
‫One analyzing spending.
‫Zero based budgeting requires you to identify your team's activities and look at more cost effective
‫ways of doing them. Two, avoiding budget inflation.
‫Zero based budgeting makes it difficult for managers to inflate their budgets artificially because they
‫must explain and justify the activities and expenses.
‫This can be from a business perspective or functional perspective.
‫Three.
‫Increasing communication.
‫Zero based budgeting encourages discussion around the budget because everyone must explain their expense
‫of relation to the program and the organization's goals. Four allocating your resources effectively.
‫Once you complete the zero based budgeting review process, you can allocate funds to the areas where
‫you need them the most. Five eliminating waste.
‫As a part of this process, you have to review your activities, decide which are necessary and what
‫you can eliminate. Six, encouraging efficiency.
‫One of the main reasons for zero based budgeting is to promote efficiency, especially when, in comparison
‫to the other three budgeting concepts, we've discussed in this course. The zero based budgeting process
‫of raw brings visibility and discipline to any organization, and it's highly sought after with these
‫advantages.