What is zero-based budgeting?

Zero-based budgeting is a planning method that starts every period at zero. Each cost has to be justified again. Last year’s spend is not a default. The method is about what you allow, not about how a ledger posts. The book still records the actuals after the plan is set.

How does zero-based budgeting work?

A team builds the next period from a blank sheet. Every line needs a reason, an owner, and an amount. Lines that cannot be defended do not get funded. The plan is approved, then spend is tracked against it.

Zero-based vs incremental budgeting

Incremental budgeting starts from last year’s number and argues about the delta. That is faster. It also keeps costs that nobody would approve if they had to ask from scratch. Zero-based work is slower and usually reserved for a reset year, a new product, or a cost that has drifted.

Where the ledger fits

The budget is a plan. The ledger is the actuals. You compare them later. If the chart of accounts is messy, the comparison is messy. Name the expense balances before you start the planning round, or the approved lines will not match the posts.

How it works with Blnk

Blnk does not hold the budget. It holds the posts. Build the plan in your planning tool. Point each approved line at a named internal balance so actuals have a place to land.

Expense posts go to balances such as @Payroll or @VendorOps in the general ledger. The comparison of plan versus actual happens outside the book. See the general ledger.