Traditional cost-cutting approachįocus scope on a narrower set of costs or cost reduction toolsĮxamine every cost area for the broadest set of cost-reduction tools Here is a brief outline of the principles of both traditional cost-cutting and a zero-based approach. This simplified and incremental budgeting can lead to inefficiencies and missed opportunities for greater cost savings. Traditional annual budgets are often produced by taking the previous year’s actuals and adding a few percentage points to account for wage rises and inflation. How is zero-based budgeting different from traditional budgeting? Continue reading to learn how you can effectively implement ZBB to improve your organization’s financial health.
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