Zero-based budgeting A zero-based budgeting system is a unique way of funding activities within an organization that begins with no funds. When an organization recognizes the need to fund an activity, analysis will be completed to provide justification for that activity. From here, an appropriate budget will be created and the adequate funds will be allocated to complete the activity. Zero-based budgeting has many benefits including the detection of budgets that are inflated, and the ability to motivate employees to find cost-effective solutions and undertake responsible decision-making in relation to financial choices. Additionally, with the efficient allocation of valuable resources, companies can gain a competitive advantage.
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