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Zero Based Budgeting: From Zero to Hero

An increasing number of global corporations are adopting zero-based budgeting as a financial technique. In a zero-based budgeting process, all expenses in the organization are analyzed and justified each new reporting period. Every unit within the company starts from a “zero base,” and its costs must be associated with specific needs. The budget for each organizational function is set based on its future costs, regardless of costs in previous years. Companies that follow this strategy tend to create a culture of awareness about cost drivers, budget cuts and targets.

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