Whats the difference between Zero based budgeting and traditional budgeting?

Many companies today use traditional budgeting by implementing simple calls for incremental increases over previous budgets, such as a 2% increase in spending, as opposed to a justification of both old and new expenses, as called for with zero-based budgeting. Traditional budgeting analyzes only new expenditures, while zero-based budgeting starts from zero and calls for a justification of all old, recurring expenses in addition to new expenditures. Zero-based budgeting aims to put the onus on managers to justify expenses, and aims to drive value for an organization by optimizing costs and not just revenue.


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