Zero-Based Budgeting (ZBB)

Zero-based budgeting (ZBB) is the process of justifying all expense items from scratch (or a zero base) for each financial period by providing the business case for each expense. ZBB differs from the traditional approach to budgeting, where historical spend patterns are used as the basis for future budgets. Instead, budgetary judgments are made for each budget line based on projected return and alignment with strategic goals. ZBB was conceived in the 1970s by Peter Pyhrr, an accounting manager at Texas Instruments.

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